Hagedorn v. Commission on Audit
REITERATIONFacts
The Antecedents: The Sangguniang Panlungsod of Puerto Princesa City enacted Ordinance No. 438, establishing an Early and Voluntary Separation Incentive Program (EVSIP) aimed at improving organizational structure, granting incentives for loyalty and service, and encouraging retireable employees to avail of the program. The ordinance specified benefits based on years of service, computed using multipliers of the basic monthly salary. Subsequently, Ordinance No. 500 amended Ordinance No. 438, increasing the minimum service requirement from 10 to 15 years. Payments totaling PHP 89,672,400.74 were made under this program. Procedural History: Following a post-audit in 2013, the Commission on Audit (COA) issued Notices of Disallowance (NDs) against the EVSIP payments, holding both approving officials and recipients liable. Appeals to the COA Regional Director were denied, with the director finding the first batch of appeals filed out of time and affirming the disallowance for the second batch on grounds that the EVSIP was not based on a reorganization law, was a prohibited supplementary retirement plan, and that the operative fact doctrine was inapplicable. The COA Commission Proper affirmed the Regional Director's decision in Decision No. 2021-247. The Petition: Petitioners, officials and employees of the Puerto Princesa City Government who were involved in the approval or receipt of EVSIP benefits, filed a Petition for Certiorari with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction before the Supreme Court. They argued that the COA committed grave abuse of discretion by declaring Ordinance No. 438 void, as only courts can do so, and that the ordinance complied with legal conditions for an incentive program. They also claimed they acted in good faith and sought injunctive relief to prevent financial hardship.
Issue(s)
Whether the non-filing of a motion for reconsideration from the COA's assailed Decision renders the instant Petition dismissible. Whether Ordinance No. 438, Resolution No. 850-2010, and Ordinance No. 500, as well as the payments made under the EVSIP are valid. If in the negative, whether the petitioners are liable for the amounts paid to the payee-beneficiaries of the EVSIP. Whether the petitioners are entitled to a TRO or an injunction.
Ruling
The Petition is dismissed for lack of merit. The Court affirmed the Commission on Audit's Decision No. 2021-247. Ordinance No. 438 and Resolution No. 850-2010 were declared null and void in Bayron v. Commission on Audit, G.R. No. 253127, and this ruling was reiterated. Consequently, Ordinance No. 500, which amended Ordinance No. 438, was also declared null and void. The application for a TRO and/or Writ of Preliminary Injunction was denied.
Ratio Decidendi
On the issue of non-filing of a motion for reconsideration: The Court reiterated its stance in Bayron v. Commission on Audit that while the validity of the ordinance and appropriations are questions of law, the petitioners' plea of good faith raises a question of fact. However, the Court found it prudent to defer the determination of good faith to the Office of the Ombudsman, similar to the approach in Bayron, thus dispensing with the strict requirement of a motion for reconsideration in this specific context where the primary issue of the ordinance's validity had already been settled. On the validity of Ordinance No. 438, Resolution No. 850-2010, and Ordinance No. 500, and the EVSIP payments: The Court categorically declared Ordinance No. 438 and Resolution No. 850-2010 null and void for being ultra vires and contrary to Section 28(b) of Commonwealth Act No. 186, as amended by Republic Act No. 4968. This ruling was based on the prior decision in Bayron v. Commission on Audit. The EVSIP was found to be a supplementary retirement package, not a valid separation pay program tied to a reorganization, and thus proscribed by law. The Court also nullified Ordinance No. 500, which amended Ordinance No. 438, for the same reasons. On the liability of the petitioners: The Court held that while the operative fact doctrine applies due to the nullification of the ordinance, it does not automatically relieve the petitioners from liability. Their liability hinges on a finding of good faith in approving and implementing Ordinance No. 438 and disbursing the EVSIP benefits. The Court deferred the determination of their good faith to the Office of the Ombudsman, which was directed to conduct an investigation and forward its findings to the COA for appropriate action regarding their solidary liability for the disallowed amounts. On the entitlement to a TRO or injunction: The Court denied the application for a TRO and/or Writ of Preliminary Injunction. Petitioners failed to demonstrate a clear and unmistakable right to be protected, as the validity of the EVSIP and their own good faith were under scrutiny. The alleged financial damage was considered quantifiable and not the "grave and irreparable injury" required for injunctive relief, especially since the determination of their liability was pending investigation.
Main Doctrine
Local government ordinances, including those establishing early separation incentive programs, are subordinate to national laws and cannot create supplementary retirement or pension plans that are proscribed by statutes such as Commonwealth Act No. 186, as amended by Republic Act No. 4968. Such ordinances are considered ultra vires and void. While the operative fact doctrine may recognize the effects of such void ordinances prior to their nullification, this recognition is strictly contingent upon a finding of good faith on the part of the officials who enacted or implemented them and the recipients of the benefits, a determination that falls within the purview of investigative bodies like the Office of the Ombudsman.