v.

COA__________________________________________________________
Docket No.: G.R. No. 199439
Date: April 22, 2014
Petitioner: City of General Santos
Respondent: Commission on Audit
Ponente: Leonen, J.

Statement of the Case:

In this special civil action for certiorari, the city of General Santos asks us to find grave
abuse of discretion on the part of the Commission on Audit (COA). On January 20, 2011,
respondent Commission on Audit affirmed the findings of its Legal Services Sector in its
Opinion No. 2010-021 declaring Ordinance No. 08, series of 2009, as illegal. This was
reiterated in respondent Commission’s resolution denying the motion for reconsideration
dated October 17, 2011.2

Statement of Facts:

1. Then mayor of General Santos City, Pedro B. Acharon, Jr., issued Executive Order
No. 40, series of 2008, creating management teams pursuant to its organization
development program.
2. This was followed by Resolution No. 004, series of 2009, requesting for the mayor’s
support for GenSan SERVES, an early retirement program to be proposed to the
Sangguniang Panlungsod.
3. Consequently, Ordinance No. 08, series of 2009, was passed together with its
implementing rules and regulations, designed "to entice those employees who were
unproductive due to health reasons to avail of the incentives being offered therein by
way of early retirement package."
4. The ordinance, as amended, provides that qualified employees below sixty (60)
years of age but not less than fifty (50) years and sickly employees below fifty (50)
years of age but not less than forty (40) years may avail of the incentives under the
program. In other words, the ordinance "provides for separation benefits for sickly
employees who have not yet reached retirement age."
 Section 5 of the ordinance states:
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 1/2) months of the employee’s latest basic salary for every year of service in the City Government.
 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 (₱50,000.00) 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 (₱5,000.00), if admitted at General Santos City Hospital; and
d. 14 karat gold ring as a token.
5. Petitioner city alleged that out of its 1,361 regular employees, 50 employees applied,
from which 39 employees qualified to avail of the incentives provided by the
ordinance. The first tranche of benefits was released in January 2010.
6. In a letter dated February 10, 2010, the city’s audit team leader, through its
supervising auditor, sent a query on the legality of the ordinance to respondent
Commission on Audit’s director for Regional Office No. XII, Cotabato City.
7. In his second indorsement dated March 15, 2010, respondent Commission’s regional
director agreed that the grant lacked legal basis and was contrary to the Government
Service Insurance System (GSIS) Act. He forwarded the matter to respondent
Commission’s Office of General Counsel, Legal Services Sector, for a more
authoritative opinion.
8. The Office of General Counsel issued COA-LSS Opinion No. 2010-021 on March 25,
2010. The opinion explained that Ordinance No. 08, series of 2009, partakes of a
 supplementary retirement benefit plan. In its view, Section 28, paragraph (b) of
Commonwealth Act No. 186, as amended, prohibits government agencies from
establishing supplementary retirement or pension plans from the time the
Government Service Insurance System charter took effect while those plans already
existing when the charter was enacted were declared abolished.
9. Petitioner city, through then mayor, Pedro B. Acharon, Jr., filed letter-reconsideration
to addressed the respondent Commission’s chairman for the reconsideration of COA-
LSS Opinion No. 2010-021.
10. Respondent Commission on Audit treated these letters as an appeal. On January 20,
2011, it rendered its decision denying the appeal and affirming COA-LSS Opinion No.
2010-021.
11. Respondent Commission on Audit agreed that Ordinance No. 08, series of 2009,
partakes of the nature of a supplementary retirement benefit plan proscribed by
Section 28, paragraph (b) of Commonwealth Act No. 186 as amended.

Issue:

Whether respondent commission on audit committed grave abuse of discretion when it

Ruling:
This court has consistently held that findings of administrative agencies are generally
respected, unless found to have been tainted with unfairness that amounted to grave abuse
of discretion:

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)

We have ruled that "not every error in the proceedings, or every erroneous conclusion of
law or fact, constitutes grave abuse of discretion." Grave abuse of discretion has been
defined as follows:

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

In Yap v. Commission on Audit,33 this court explained that the Commission on Audit has
the duty to make its own assessment of the merits of the disallowance and need not be
limited to a review of the grounds relied upon by the auditor of the agency concerned:
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

Moreover, Article IX-A, Section 7 of the Constitution provides that "unless otherwise
provided by this Constitution or by law, any decision, order, or ruling of each Commission
may be brought to the Supreme Court on certiorari by the aggrieved party within thirty
days from receipt of a copy thereof." Rule 64, Section 2 of the Revised Rules of Civil
Procedure also provides that "a judgment or final order or resolution of the Commission on
Elections and the Commission on Audit may be brought by the aggrieved party to the
Supreme Court on certiorari under Rule 65, except as hereinafter provided."

Thus, we proceed to determine whether respondent Commission on Audit acted with grave
abuse of discretion in affirming the opinion of its Legal Services Sector and finding that the
entire Ordinance No. 08, series of 2009, partakes of the nature of a proscribed
supplementary retirement benefit plan.