Bayron v. Commission on Audit
CLARIFICATIONFacts
The Antecedents: This case concerns the Early & Voluntary Separation Incentive Program (EVSIP) established by the Puerto Princesa City Government (PPCG) in 2010 through Ordinance No. 438 and Resolution No. 850-2010. The Commission on Audit (COA) issued Notices of Disallowance (NDs) in 2013 for payments made under this program, totaling PHP 89,672,400.74. The COA auditors identified petitioners, including Mayor Lucilo R. Bayron and other city officials, as liable for these disallowed disbursements. The underlying dispute centers on whether the EVSIP constitutes a valid incentive program or an illegal expenditure and an unlawful supplementary retirement plan. Procedural History: Following the COA's issuance of NDs, the petitioners pursued administrative appeals within the COA. The COA's En Banc ultimately affirmed these NDs and forwarded the case records to the Office of the Ombudsman for further investigation. Without filing a motion for reconsideration with the COA, the petitioners directly filed a Petition for Certiorari with the Supreme Court. The Supreme Court, in a Decision dated November 29, 2022, denied the petition for lack of merit, affirming the COA's decision and declaring PPCG's Ordinance No. 438 and Resolution No. 850-2010 null and void for being ultra vires and contrary to law. Petitioners then filed the present Motion for Reconsideration. The Petition: In their Motion for Reconsideration, petitioners argue that the COA's NDs constituted a collateral attack on the local ordinances and that the COA exceeded its authority by declaring them void. They also contend, citing City of General Santos v. Commission on Audit, that the EVSIP was a temporary measure related to a reorganization and not a supplementary retirement plan. Furthermore, they assert their good faith in implementing the program, supported by belated notices from the Department of Budget and Management. They seek a definitive ruling on the COA's power to invalidate local legislation and a declaration of their good faith, thereby absolving them from returning the disallowed amounts. The Supreme Court, in its Resolution, partially granted the motion, absolving Roberto D. Herrera and Mylene J. Atienza from monetary liability due to their roles, while upholding the denial of the petition for the remaining petitioners and affirming the nullity of the ordinances.
Issue(s)
Whether COA's Notices of Disallowance (NDs) relative to Ordinance No. 438 and Resolution No. 850-2010 were collateral attacks on said local legislation, and thus constitutive of grave abuse of discretion. Whether the Early & Voluntary Separation Incentive Program (EVSIP) was a supplementary early retirement plan proscribed by existing law. Whether the Court may decide on Bayron et al.'s claim of good faith relative to the enactment and implementation of the EVSIP.
Ruling
The instant Motion for Reconsideration is PARTIALLY GRANTED. Petitioners Roberto D. Herrera and Mylene J. Atienza are hereby ABSOLVED of any monetary liability relative to the refunding of the amounts covered by the Notices of Disallowance subject of respondent Commission on Audit's Decision No. 2020-100 dated January 16, 2020. The rest of the Court's Decision dated November 29, 2022 STANDS.
Ratio Decidendi
On Issue 1: The Court ruled that while the COA's Regional Office No. IV-B audit team used invalidating language (e.g., "null and void") in its Notices of Disallowance (NDs) when addressing the EVSIP's disbursements, this was merely an observation into the legal basis (or lack thereof) of the subject disbursements. The Court characterized this as an "excusable, albeit facetiously incorrect, use of language that pertain properly to the papers and chambers of the Philippine judicial department." Such wording, according to the Court, cannot conceivably amount to a collateral attack on Ordinance No. 438, as only courts possess the power to review and strike down local legislation. The COA's authority to disallow disbursements that contravene established laws, as affirmed in Abella v. Commission on Audit Proper, is a concomitant aspect of its plenary auditing power and does not equate to a judicial declaration of nullity. The COA, through the Office of the Solicitor General (OSG), correctly argued that its listing of the ordinance as null and void was merely an exposition that the disbursement constituted an illegal expenditure, being contrary to national law. On Issue 2: The Court found Bayron et al.'s reliance on City of General Santos v. Commission on Audit to be misplaced. Unlike in City of General Santos, where the early retirement program (GenSan SERVES) was enacted in the serious context of a planned reorganization with prior executive orders and extensive preparations, there was nothing on record to indicate that Ordinance No. 438 was enacted under similar circumstances. The brief mention of a planned reorganization in Ordinance No. 438 gave the "overwhelming impression of being a mere afterthought to the benefits and incentives of the EVSIP." Crucially, the benefits and incentives under PPCG's EVSIP were pegged at an employee's years of service, with progressive multipliers based on service length, which are characteristic of retirement benefits. This nature, as extensively discussed in the Court's Decision and consistent with the ruling in Conte v. Commission on Audit (as cited in City of General Santos), clearly indicates that the EVSIP was a supplementary early retirement plan, proscribed by national laws against parallel and supplementary retirement benefits for government officials and employees. Therefore, the EVSIP and its legal basis are contrary to national laws. On Issue 3: The Court partially granted the Motion for Reconsideration regarding the claim of good faith. Applying the precedent from Araullo, et al. v. Aquino III and Madera v. Commission on Audit, the Court absolved Roberto D. Herrera and Mylene J. Atienza of monetary liability. Herrera, as supervising administrative officer and acting assistant budget officer, merely certified the availability of funds, and Atienza, as an administrative officer and member of the screening committee, performed functions relative to the EVSIP's implementation. Their roles were ministerial, and they were duty-bound to honor and obey the local legislation in the honest belief that the amounts were due, absent any showing of malice or gross negligence. However, this good faith defense was deemed inapplicable to petitioners Bayron, Carbonell, Gadiano, and Oliveros III, who were sitting members of the Sangguniang Panlungsod that approved and adopted the patently ultra vires Ordinance No. 438 and Resolution No. 850-2010. Their liabilities, both criminal and administrative, are subject to detailed and exhaustive evidentiary determinations before the proper forum, the Office of the Ombudsman, and the Court, not being a trier of facts, maintained its deferral of action regarding their assertion of good faith.
Main Doctrine
The primary legal doctrine established and applied in this case is that local government units (LGUs) do not possess the authority to enact ordinances that create separate, parallel, and supplementary early retirement or separation incentive plans for their officials and employees, as such local legislation is ultra vires and directly contravenes national laws like Commonwealth Act No. 186, as amended by Republic Act No. 4968. The Commission on Audit (COA) is empowered to disallow disbursements made under such ultra vires ordinances, and while its Notices of Disallowance (NDs) may use language implying nullity, this does not constitute a collateral attack on the ordinance, as the power to declare an ordinance null and void rests exclusively with the courts. Furthermore, the defense of good faith in implementing such ordinances is not uniformly applied; it may absolve ministerial officers who merely certify funds or serve on screening committees, but not the local legislators who were directly responsible for enacting the ultra vires legislation, whose culpability requires further evidentiary determination by the Office of the Ombudsman.