G.R. No.

199439 April 22, 2014 CITY OF GENERAL SANTOS,

vs. COMMISSION ON AUDIT
G.R. No. 199439

April 22, 2014

CITY OF GENERAL SANTOS, represented by its Mayor, HON. DARLENE MAGNOLIA R.

ANTONINO-CUSTODIO Petitioner,
vs.
COMMISSION ON AUDIT, Respondent.
LEONEN, J.:
NATURE:
This is a special civil action for certiorari filed by the city of General Santos asking to find grave abuse
of discretion on the part of the Commission on Audit (COA).which affirmed the findings of its Legal
Services Sector in its Opinion No. 2010-021 declaring Ordinance No. 08, series of 2009, as illegal.
FACTS:

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." 6
This contextual background in the passing of Ordinance No. 08, series of 2009, was not contested by
respondent Commission on Audit.
In response to the endorsement of the city audit team leader, respondent Commissions 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 Commissions Office of General Counsel, Legal
Services Sector.
The Office of General Counsel issued COA-LSS Opinion No. 2010-021. Respondent Commission on
Audit observed that GenSan SERVES was not based on a law passed by Congress but on ordinances
and resolutions passed and approved by the Sangguniang Panlungsod and Executive Orders by the
city mayor.26 Moreover, nowhere in Section 76 of Republic Act No. 7160, otherwise known as the Local
Government Code, does it provide a specific power for local government units to establish an early
retirement program.
ISSUE:
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
HELD:

The Court agree with respondent Commission on Audit but only insofar as the invalidity of Section 5 of
the ordinance is concerned.
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 employees latest basic salary for every year of
service in the City Government.9
Section 5 refers to an "early retirement incentive," the amount of which is pegged on the beneficiarys
years of service in the city government. The ordinance provides that only those who have rendered
service to the city government for at least 15 years may apply.75 Consequently, this provision falls under
the definition of a retirement benefit. Applying the definition in Conte, it is a form of reward for an
employees loyalty and service to the city government, and it is intended to help the employee enjoy the
remaining years of his or her life by lessening his or her financial worries.
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
The Court declares Section 6 on post-retirement incentives as valid.
FALLO:
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Commission on Audit decision dated
January 20, 2011 and resolution dated October 17, 2011 are AFFIRMED with MODIFICATION insofar as
Section 6 of Ordinance No. 08, series of 2009, as amended by Ordinance No. 11, series of 2009, is declared as
VALID.