EN BANC
G.R. No. 199439, April 22, 2014
CITY OF GENERAL SANTOS, REPRESENTED BY ITS MAYOR, HON. DARLENE MAGNOLIA R. ANTONINO–CUSTODIO, Petitioner, v. COMMISSION ON AUDIT, Respondent.
D E C I S I O N
LEONEN, J.:
Section 5. GenSan SERVES Program Incentives On Top of Government Service Insurance System (GSIS) and PAG–IBIG Benefits – Any personnel qualified and approved to receive the incentives of this program shall be entitled to whatever retirement benefits the GSIS or PAG–IBIG is granting to a retiring government employee.
Moreover, an eligible employee shall receive an early retirement incentive provided under this program at the rate of one and one–half (1 ½) months of the employee’s latest basic salary for every year of service in the City Government.9
Section 6. GenSan SERVES Post–Retirement Incentives – Upon availment of early retirement, a qualified employee shall enjoy the following in addition to the above incentives:
(a) Cash gift of Fifty Thousand Pesos (P50,000.00) for the sickly employees;
(b) Lifetime free medical consultation at General Santos City Hospital;
(c) Annual aid in the maximum amount of Five Thousand Pesos (P5,000.00), if admitted at General Santos City Hospital; and
(d) 14 karat gold ring as a token.10
In fine, since Ordinance No. 08 is in the nature of an ERP [Early Retirement Program] of the City Government of General Santos, a law authorizing the same is a requisite for its validity. In the absence, however, of such law, the nullity of Ordinance No. 08 becomes a necessary consequence.
It is hoped that the foregoing sufficiently answers the instant query.19
WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit and COA–LSS Opinion No. 2010–021 dated March 25, 2010 of the OGC, this Commission is hereby AFFIRMED. Accordingly, the ATL of General Santos City is hereby directed to issue a Notice of Disallowance on the illegal disbursements made under the Gen[S]san SERVES.23
WHETHER RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT CONSIDERED ORDINANCE NO. 08, SERIES OF 2009, IN THE NATURE OF AN EARLY RETIREMENT PROGRAM REQUIRING A LAW AUTHORIZING IT FOR ITS VALIDITY
It is the general policy of the Court to sustain the decisions of administrative authorities, especially one which is constitutionally–created not only on the basis of the doctrine of separation of powers but also for their presumed expertise in the laws they are entrusted to enforce. Findings of administrative agencies are accorded not only respect but also finality when the decision and order are not tainted with unfairness or arbitrariness that would amount to grave abuse of discretion. It is only when the COA has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, that this Court entertains a petition questioning its rulings. There is grave abuse of discretion when there is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law and evidence but on caprice, whim and despotism.30 (Emphasis supplied, citations omitted)
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. x x x.32
x x x we rule that, in resolving cases brought before it on appeal, respondent COA is not required to limit its review only to the grounds relied upon by a government agency’s auditor with respect to disallowing certain disbursements of public funds. In consonance with its general audit power, respondent COA is not merely legally permitted, but is also duty–bound to make its own assessment of the merits of the disallowed disbursement and not simply restrict itself to reviewing the validity of the ground relied upon by the auditor of the government agency concerned. To hold otherwise would render COA’s vital constitutional power unduly limited and thereby useless and ineffective.34
Section 5. Gen[S]an SERVES Program Incentives On Top of Government Service Insurance System (GSIS) and PAG–IBIG Benefits – Any personnel qualified and approved to receive the incentives of this program shall be entitled to whatever retirement benefits the GSIS or PAG–IBIG is granting to a retiring government employee, except those benefits the payment of which are passed on to the employer. In which case, the benefits granted under this ordinance shall only be considered as one of the options available to a retiring city employee.
Moreover, an eligible employee shall receive an early retirement incentive provided under this program at the rate of one and one–half (1 ½) months of the employee’s latest basic salary for every year of service in the City Government. (Emphasis supplied)
Section 76. Organizational Structure and Staffing Pattern. – Every local government unit shall design and implement its own organizational structure and staffing pattern taking into consideration its service requirements and financial capability, subject to the minimum standards and guidelines prescribed by the Civil Service Commission.
Section 16. General Welfare. – Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self–reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants.
Thus, consistent with the state policy of local autonomy as guaranteed by the 1987 Constitution, under Section 25, Article II and Section 2, Article X, and the Local Government Code of 1991, we declare that the grant and release of the hospitalization and health care insurance benefits given to petitioner’s officials and employees were validly enacted through an ordinance passed by petitioner’s Sangguniang Panlalawigan.57
A reorganization involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or redundancy of functions.62 It could result in the loss of one’s position through removal or abolition of an office. However, for a reorganization for the purpose of economy or to make the bureaucracy more efficient to be valid, it must pass the test of good faith; otherwise, it is void ab initio.63 (Emphasis supplied)
SECTION 2. No officer or employee in the career service shall be removed except for a valid cause and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide reorganization, a position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil Service Law. The existence of any or some of the following circumstances may be considered as evidence of bad faith in the removals made as a result of reorganization, giving rise to a claim for reinstatement or reappointment by an aggrieved party:
a) Where there is a significant increase in the number of positions in the new staffing pattern of the department or agency concerned;
b) Where an office is abolished and another performing substantially the same functions in created;
c) Where incumbents are replaced by those less qualified in terms of status of appointment, performance and merit;
d) Where there is a reclassification of offices in the department or agency concerned and the reclassified offices perform substantially the same functions as the original offices; and
e) Where the removal violates the order of separation provided in Section 3 hereof. (Emphasis supplied)
(b) Hereafter no insurance or retirement plan for officers or employees shall be created by any employer. All supplementary retirement or pension plans heretofore in force in any government office, agency, or instrumentality or corporation owned and controlled by the government, are hereby declared inoperative or abolished: Provided, That the rights of those who are already eligible to retire thereunder shall not be affected.
Retirement benefits are, after all, a form of reward for an employee’s loyalty and service to the employer, and are intended to help the employee enjoy the remaining years of his life, lessening the burden of worrying about his financial support or upkeep. On the other hand, a pension partakes of the nature of “retained wages” of the retiree for a dual purpose: to entice competent people to enter the government service, and to permit them to retire from the service with relative security, not only for those who have retained their vigor, but more so for those who have been incapacitated by illness or accident.69 (Emphasis supplied)
x x x Sec. 28 (b) as amended by RA 4968 in no uncertain terms bars the creation of any insurance or retirement plan – other than the GSIS – for government officers and employees, in order to prevent the undue and inequitous proliferation of such plans. x x x. To ignore this and rule otherwise would be tantamount to permitting every other government office or agency to put up its own supplementary retirement benefit plan under the guise of such “financial assistance.71
Section 4. Prioritization. – The following applicants shall be prioritized in availing the program:
a) First – Employees below sixty (60) years of age but not less than fifty (50) years who are determined by the Chief of General Santos City Hospital to be qualified to avail of the program;
b) Second – Employees below sixty (60) years of age but not less than fifty (50) years who are under continuous medication as determined by the Chief of General Santos City Hospital;
c) Third – Employees below fifty (50) years of age but not less than forty (40) years who are determined by the Chief of General Santos City Hospital to be physically or mentally incapacitated to further continue rendering service with the City Government and recommended to avail of the program; and
d) Fourth – Employees below sixty (60) years of age but not less than fifty (50) years who are desirous to avail of the program.
Section 3. Coverage. – GenSan SERVES program covers the following employees of the City Government:
(a) personnel occupying permanent positions;
(b) those who are below sixty (60) years of age but not less than fifty (50) years on the date of application;
(c) those who are below fifty (50) years of age but not less than forty (40) years on the date of application but confirmed by the Chief of General Santos City Hospital to be sickly and recommended to avail early retirement; and
(d) those who must have served the City Government of General Santos a minimum of fifteen (15) continuous years.
Section 9. All officers and employees who are found by the Civil Service Commission to have been separated in violation of the provisions of this Act, shall be ordered reinstated or reappointed as the case may be without loss of seniority and shall be entitled to full pay for the period of separation. Unless also separated for cause, all officers and employees, who have been separated pursuant to reorganization shall, if entitled thereto, be paid the appropriate separation pay and retirement and other benefits under existing laws within ninety (90) days from the date of the effectivity of their separation or from the date of the receipt of the resolution of their appeals as the case may be: Provided, That application for clearance has been filed and no action thereon has been made by the corresponding department or agency. Those who are not entitled to said benefits shall be paid a separation gratuity in the amount equivalent to one (1) month salary for every year of service. Such separation pay and retirement benefits shall have priority of payment out of the savings of the department or agency concerned. (Emphasis supplied)
Section 6. GenSan SERVES Post–Retirement Incentives – Upon availment of early retirement, a qualified employee shall enjoy the following in addition to the above incentives:
(e) Cash gift of Fifty Thousand Pesos (P50,000.00) for the sickly employees;
(f) Lifetime free medical consultation at General Santos City Hospital;
(g) Annual aid in the maximum amount of Five Thousand Pesos (?5,000.00), if admitted at General Santos City Hospital; and
(h) 14 karat gold ring as token.
NOW, THEREFORE, BE IT RESOLVED, That all the SSS employees who are simultaneously qualified for compulsory retirement at age 65 or for optional retirement at a lower age be encouraged to avail for themselves the life annuity under R.A. 660, as amended; x x x.81
SECTION 458. – Powers, Duties, Functions and Compensation. – (a) The Sangguniang Panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the general welfare of the city and its inhabitants pursuant to section 16 of this Code and in the proper exercise of the corporate powers of the city as provided for under section 22 of this Code, and shall:
x x x x
(5) Approve ordinances which shall ensure the efficient and effective delivery of the basic services and facilities as provided for under Section 17 of this Code, and in addition to said services and facilities, shall:
x x x x
(xiv) Provide for the care of disabled persons, paupers, the aged, the sick, persons of unsound mind, abandoned minors, juvenile delinquents, drug dependents, abused children and other needy and disadvantaged persons, particularly chlidren and youth below eighteen (18) years of age; and, subject to availability of funds, establish and provide for the operation of centers and facilities for said needy and disadvantaged persons[.] (Emphasis supplied)
ARTICLE XIII
Social Justice and Human RightsHEALTH
Section 11. 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 the 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.
Endnotes:
1 This special civil action for certiorari was filed pursuant to Rule 64 in relation to Rule 65 of the 1997 Rules of Court.
2Rollo, p. 20.
3 Id. at 4, petition.
4 Id. at 184, petitioner’s memorandum.
5 Id., petitioner’s memorandum.
6 Id. at 187, petitioner’s memorandum.
7 See Ordinance No. 8 attached as Annex K of the petition. Ordinance No. 8, Sec. 2, par. (a), as amended, defines “Applicants.” Rollo, p. 64.
8Rollo, p. 183, petitioner’s memorandum.
9 Id. at 65–66. The first paragraph of Section 5 has been amended by Ordinance No. 11, series of 2009, as follows:Section 5. GenSan SERVES Program Incentives On Top of Government Service Insurance System (GSIS) and PAG–IBIG Benefits – Any personnel qualified and approved to receive the incentives of this program shall be entitled to whatever retirement benefits the GSIS or PAG–IBIG is granting to a retiring government employee, except those benefits the payment of which are passed on to the employer. In which case, the benefits granted under this ordinance shall only be considered as one of the options available to a retiring city employee.10 Id. at 66, Ordinance No. 8, Sec. 6.
11 Id., Ordinance No. 8, Sec. 10.
12 Id. at 185, petitioner’s memorandum.
13 Id. at 8, petition.
14 Id. at 34, COA decision.
15 Id., COA decision.
16 Id. at 24–25, COA–LSS opinion.
17 332 Phil. 20 (1996) [Per J. Panganiban, En Banc].
18 565 Phil. 271 (2007) [Per C.J. Puno, En Banc].
19Rollo, p. 25, COA–LSS opinion.
20 Id. at 185–186, petitioner’s memorandum.
21 Id. at 33–39. A copy of the COA decision is attached as Annex E of the petition.
22 Id. at 51–53. A copy of the COA resolution is attached as Annex G of the petition.
23 Id. at 39, COA decision.
24 332 Phil. 20 (1996) [Per J. Panganiban, En Banc].
25 565 Phil. 271 (2007) [Per C.J. Puno, En Banc].
26 Id. at 37, COA decision.
27 Id. at 37–38, COA decision.
28 Sec. 9. Period of Applicability and Effectivity of the Incentive Benefits. – Applications for early retirement and voluntary separation benefits hereunder shall be entertained only if filed within a period of two (2) months from the issuance of the rules and regulations for the implementation of this Act pursuant to Section 13 hereof. The oldest employees who are the most senior in the service will be given priority in the payment of benefits.
29 Id. at 38, COA decision.
30Veloso v. Commission on Audit, G.R. No. 193677, September 6, 2011, 656 SCRA 767, 777 [Per J. Peralta, En Banc], citing Yap v. Commission on Audit, G.R. No. 158562, April 23, 2010, 619 SCRA 154, 174 [Per J. Leonardo–De Castro, En Banc]. See also Villanueva v. Commission on Audit, 493 Phil. 887 (2005) [Per J. Chico–Nazario, En Banc].
31Dimapilis–Baldoz v. Commission on Audit, G.R. No. 199114, July 16, 2013, 701 SCRA 318, 335 [Per J. Perlas–Bernabe, En Banc], citing Tavera–Luna, Inc. v. Nable, 67 Phil. 340, 344 (1939) [Per J. Laurel, En Banc].
32Development Bank of the Philippines v. Commission on Audit, 530 Phil. 271, 278 [Per J. Puno, En Banc], citing Tañada v. Angara, 338 Phil. 546, 604 (1997) [Per J. Panganiban, En Banc].
33 G.R. No. 158562, April 23, 2010, 619 SCRA 154 [Per J. Leonardo–De Castro, En Banc].
34 Id. at 169.
35Rollo, p. 187, petitioner’s memorandum,
36 Id. at 192, petitioner’s memorandum.
37 Id. at 185, petitioner’s memorandum.
38 Id. at 187–188, petitioner’s memorandum.
39 A copy of Ordinance No. 11 is attached as Annex M of the petition, rollo, pp. 73–76; Petitioner’s memorandum, rollo, p. 192.
40Rollo, p. 18, petition.
41 Id. at 7, petition; rollo, pp. 184–185, petitioner’s memorandum.
42 A copy of Executive Order No. 40, series of 2008, is attached as Annex H of the petition, rollo, pp. 54–57.
43Rollo, pp. 189–190, petitioner’s memorandum.
44 This was approved on June 10, 1988.
45Rollo, p. 191, petitioner’s memorandum.
46 Id., petitioner’s memorandum.
47 Id., petitioner’s memorandum.
48 Id. at 168, respondent’s memorandum.
49 Id. at 174, respondent’s memorandum.
50 Id. at 175, respondent’s memorandum.
51 Id. at 176, respondent’s memorandum.
52 A copy of Executive Order No. 40, series of 2008, is attached as Annex H of the petition, rollo, pp. 54–57.
53 G.R. No. 182574, September 28, 2010, 631 SCRA 431 [Per J. Carpio, En Banc].
54 Section 2. All heads of government offices/agencies, including government owned and/or controlled corporations, as well as their respective governing boards are hereby enjoined and prohibited from authorizing/granting Productivity Incentive Benefits or any and all forms of allowances/benefits without prior approval and authorization via Administrative Order by the Office of the President. Henceforth, anyone found violating any of the mandates in this order, including all officials/agency found to have taken part thereof, shall be accordingly and severely dealt with in accordance with the applicable provisions of existing administrative and penal laws.
Consequently, all administrative authorizations to grant any form of allowances/benefits and all forms of additional compensation usually paid outside of the prescribed basic salary under R.A. 6758, the Salary Standardization Law, that are inconsistent with the legislated policy on the matter or are not covered by any legislative action are hereby revoked.
55Province of Negros Occidental v. Commissioners, Commission on Audit, G.R. No. 182574, September 28, 2010, 631 SCRA 431, 441 [Per J. Carpio, En Banc].
56 Id. at 441.
57 Id. at 444.
58Rollo, p. 184, petitioner’s memorandum.
59 Id., petitioner’s memorandum.
60 Id. at 63, Resolution No. 004, series of 2009.
61 G.R. Nos. 156556–57, October 4, 2011, 658 SCRA 420 [Per J. Peralta, En Banc].
62 Id. at 439, citing Canonizado v. Aguirre, 380 Phil. 280, 296 (2000) [Per J. Gonzaga–Reyes, En Banc].
63 Id., citing Dario v. Mison, 257 Phil. 84 (1989) [Per J. Sarmiento, En Banc]; Vide: Dytiapco v. Civil Service Commission, G.R. No. 92136, July 3, 1992, 211 SCRA 88 [Per J. Nocon, En Banc]; Domingo v. Development Bank of the Philippines, G.R. No. 93355, April 7, 1992, 207 SCRA 766 [Per J. Regalado, En Banc]; and Pari–an v. Civil Service Commission, 279 Phil. 835 (1991) [Per Griño–Aquino, En Banc].
64Rollo, p. 192, petitioner’s memorandum.
65 Id., petitioner’s memorandum.
66 Id., petitioner’s memorandum.
67 The Government Service Insurance Act was approved on November 14, 1936.
68 Republic Act No. 4968 was approved on June 17, 1967.
69 See GSIS v. De Leon, G.R. No. 186560, November 17, 2010, 635 SCRA 321, 334 [Per J. Nachura, Second Division], citing Conte v. Commission on Audit, 332 Phil. 20, 34–35 (1996) [Per J. Panganiban, En Banc].
70Conte v. Commission on Audit, 332 Phil. 20 (1996) [Per J. Panganiban, En Banc].
71 Id. at 35.
72 Id.
73 Sec. 11, par. (a). Amount of annuity. — Upon retirement after faithful and satisfactory service a member shall be automatically entitled to a life annuity guaranteed for at least five years and thereafter as long as he lives. The amount of the monthly annuity at the age of fifty–seven years shall be thirty pesos, plus for each year of service after the sixteenth of June, nineteen hundred and fifty–one, two per centum of the average monthly salary received by him during the last three years of service, plus for each year of service rendered prior to the sixteenth of June, nineteen hundred and fifty–one, one and two–tenths per centum of said average monthly salary: Provided, That this amount shall be adjusted actuarially if retirement be at an age other than fifty–seven years: Provided, further, That the maximum amount of monthly annuity at age fifty–seven shall not in any case exceed three–fourths of said average monthly salary: And provided, finally, That retirement benefit shall be paid not earlier than one year after the approval of this Act. In lieu of this annuity, he may prior to his retirement elect one of the following equivalent benefits:
(1) Monthly annuity during his lifetime;
(2) Monthly annuity during the joint–lives of the employee and his or her spouse guaranteed for at least five years, which annuity, however, shall, upon the death of either and after the five–year guaranteed period, be reduced to one–half and be paid to the survivor;
(3) For those who are at least sixty–three years of age, lump–sum payment of present value of annuity for first five years, and for those who are at least sixty but below sixty–three years of age, lump–sum payment of the present value of the annuity for the first three years, with the balance of the five–year guaranteed annuity payable in lump sum upon reaching sixty–three years of age, and annuity after the guaranteed period to be paid monthly: Provided, That said lump–sum payment of annuity may be made to a retired employee only if the premiums paid by and for him are sufficient to cover said payment or payments: Provided, further, That it shall be compulsory for an employer to pay on the date of retirement in preference to all other obligations, except salaries and wages of its employees, its share of at least the premiums required to permit an employee to enjoy this option;
(4) Such other benefits as may be approved by the System. (Emphasis supplied)
74See Sec. 2, par. (a) of Ordinance No. 08, series of 2009, which defines “Applicants.” Rollo, pp. 64–65.
75 Ordinance No. 08, series of 2009, Sec. 2, par. (a).
76See Republic Act. No. 6656. Section 9 provides as follows:Section 9. All officers and employees who are found by the Civil Service Commission to have been separated in violation of the provisions of this Act, shall be ordered reinstated or reappointed as the case may be without loss of seniority and shall be entitled to full pay for the period of separation. Unless also separated for cause, all officers and employees, who have been separated pursuant to reorganization shall, if entitled thereto, be paid the appropriate separation pay and retirement and other benefits under existing laws within ninety (90) days from the date of the effectivity of their separation or from the date of the receipt of the resolution of their appeals as the case may be: Provided, That application for clearance has been filed and no action thereon has been made by the corresponding department or agency. Those who are not entitled to said benefits shall be paid a separation gratuity in the amount equivalent to one (1) month salary for every year of service. Such separation pay and retirement benefits shall have priority of payment out of the savings of the department or agency concerned. (Emphasis supplied)77 See GSIS v. Commission on Audit, G.R. No. 162372, October 19, 2011 [Per J. Leonardo–De Castro, En Banc], available at the Supreme Court website: This court made a distinction between plans that augment retirement benefits under existing laws and early retirement incentives plans. The latter may be adopted for government employees if authorized by a law that streamlines the organization and encourages employees to retire early.
78 See E. Razon, Inc. v. Secretary of DOLE, G.R. No. 85867, May 13, 1993, 222 SCRA 1, 7 [Per J. Melo, Third Division], citing Marcopper Mining Corporation v. NLRC, G.R. No. 83207, August 5, 1991, 200 SCRA 167 [Per J. Cruz, First Division].
79 332 Phil. 20 (1996) [Per J. Panganiban, En Banc].
80 Id.
81 Id. at 28.
82 Id.
83Rollo, p. 188, petitioner’s memorandum.
84 Id. at 185 and 191, petitioner’s memorandum.
85 Id. at 191, petitioner’s memorandum.
86 Id. at 66, Ordinance No. 08, series of 2009, Sec. 8.
Section 8. Availment of GenSan Serves. – The Gensan Serves shall be a one–time offer only.
87 Id., Ordinance No. 08, series of 2009, Sec. 7.
Section 7. Availment Period. – The GenSan SERVES shall be offered to and may be availed of by qualified applicants starting from the effectivity of this Ordinance and within a period of two (2) months from its effectivity. All applications filed to the Human Resource Management and Development Office beyond the aforesaid period shall not be honored and be denied due course.