G.R. No.

146175 June 30, 2008 12 years 5 months -

SIMEON M. VALDEZ, petitioner,
vs. Sub total 5 months
GOVERNMENT SERVICE INSURANCE SYSTEM,
respondent. 27 years 5 months 5. As Director of MECO

Before the Court is a special civil action for certiorari under 3. As Member, Board of Regents 1 Jan. 1993 to 31 Dec. 1994
Rule 65 of the Rules of Court, filed by petitioner Simeon M.
Valdez assailing the July 31, 2000 Decision1 of the Court of a) INIT (1975-1977) -
Appeals (CA) in CA-G.R. SP No. 54870, as reiterated in its
Resolution2 of October 17, 2000, upholding the Civil Service - 2 year
Commission’s (CSC’s) January 14, 1999 Opinion and
Resolution No. 991940. 3 years 1 Jan. 1995 to March 1995

Principally, the CSC held that petitioner’s services rendered in b) MMSU (1978-1987) -
the Manila Economic Cultural Office (MECO), Mariano
Memorial State University (MMSU), Philippine Veterans - 3 months
Investment Development Company (PHIVIDEC) and as OIC
Vice-Governor of Ilocos Norte cannot be credited in the 10 years Sub total
computation of his retirement benefits.
c) MMSU (1989-1992) -
The facts are as follows:
- 2 years 3months
On October 09, 1998, petitioner filed his application for
retirement benefits with the Government Service Insurance 4 years REMARKS
System (GSIS).
Sub total 1. Please note therefore that there is overlapping of my services
On November 03, 1998, petitioner filed the same application at PHIVIDEC & MMSU. My services of 12 years 5 months
with the CSC and at the same time, he sought the CSC’s opinion - with PHIVIDEC should be counted and only 4 years and 7
on whether his two (2) years and three (3) months stint as months with MMSU where there is no overlapping.
MECO Director can be accredited as government service among 17 years
others. 2. My services as OIC Governor should not be counted as I was
4. As OIC Vice-Governor Ilocos Norte still with PHIVIDEC during the 6 months I served as OIC Vice-
In support of his claim for retirement benefits, petitioner Governor.
submitted a summary of his government service record, to wit: Nov. 1986-Dec. 1986
3. Therefore the length of service to be credited for my
SUMMARY - retirement will cover only the following:

1. As Congressman (5th, 6th, 7th & 10th Congress) 2 months a) As Congressman

- Jan. 1, 1987 to Mar. 1987 -

15 years - 15 years

2. As Director of PHIVIDEC November 1974 to March 1987 3 months b) As Director of PHIVIDEC

- Sub total -

02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 1 | 20

12 years 5 months
c) As Board of Regent MMSU
- "Under the Leave Law and Rules, Leave Privileges are accorded
4 years 7 months
d) As Director of MECO
- not entitled to leave unless he works part-time in two different
2 years 3 months
Total
- leave benefits in consideration of their services would be
33 years 15 months
On February 23, 1999, petitioner received two mails, one from
the CSC and the other from GSIS. The letter from CSC
contained the challenged January 14, 1999 Opinion3 denying
the accreditation of petitioner’s services as former Director of
MECO and of PHIVIDEC and as Member of the Board of
Regents of MMSU, pertinently reading as follows:
Section 2 (1), Article IX of the 1987 Constitution provides that
the "civil service embraces all branches, subdivisions,
instrumentalities and agencies of the Government, including
government-owned or controlled corporations with original
charters." (Underscoring Ours). Equivocably, subsidiary
corporations created under the Corporation Code are not
considered part of the Civil Service. Since MECO is a
subsidiary corporation of the government governed by its
Articles of Incorporation and By-Laws, whatever services
rendered therein shall not be considered part and parcel of
government service.
xxx
We note that at the time you were still a member of the Board of
Regents of the Mariano Marcos State University (MMSU) from
1978 to 1992, you were likewise holding the positions of
Philvidic Director (November 1974-March 1987) and as OIC-
Vice Governor (August 1986-March 1987). As such, it must be
reiterated that a part-time employee is not entitled to leave
benefits unless he works part-time in two different government
02 OCTOBER 2017
offices and renders the required office hours. This rule has been
emphasized in CSC Resolution No. 90-1087, pertinent portion
of which reads as follows:
only to regular, temporary, provisional or casual officials and
employees who are rendering full time service in an agency or
government. However, the status of appointment of employees
in the government further identify certain specifications in the
entitlement of leave privileges; hence, a part-time employee is
offices and renders the required office hours (Manual of Leave
Administration, p.3.2). Thus it is completely inconceivable that
members of the various Regulatory Board of the PRC who hold
concurrently other positions in the civil service are, at the same
time on full-time basis in other positions. x x x To grant them
tantamount to double compensation, the receipt of which is
constitutionally prescribed. x x x This has to be so, otherwise
they would be enjoying leave privileges over and above what is
provided in the leave Law and Rules (Valdez v. Commission on
Audit: GR 87277, 25 May 1989). Besides, CSC Memorandum
Circular No. 43, series of 1989 (Retirement of Employees
Holding More than One Positions), is explicit that ‘an
appointment to a second position must be regarded only as
imposing additional duties to the regular functions of an
employee and consequently an employee can retire only from
his regular or main position and not from his additional
position."
Let is (sic) be stressed that for purposes of computation of
government service, only "full-time services with
compensation" are included (Section 10 (b), RA 8291).
Moreover, under Section 2(l) of RA 8291, "compensation"
refers to the basic pay or salary received by an employee,
pursuant to his election/appointment, excluding per diems,
bonuses, overtime pay, honoraria, allowances and other
emoluments received in addition to the basic pay which are not
integrated into the basic pay under existing laws. (Underscoring
Ours)
Premised on our answer in your first query, your services at the
MECO for 2 years and 3 months did not earn any leave credit
for you.
The correspondence from the GSIS contained a Letter4 and a
Retirement Voucher informing petitioner of the approval of his
retirement benefits computed on the basis of the CSC’s opinion.
LAW ON PUBLIC CORPORATION
Displeased, petitioner sought reconsideration of the subject CSC
opinion in a Letter5 addressed to the CSC and the GSIS.
Petitioner insisted on the inclusion of his services rendered in
the MECO, PHIVIDEC and MMSU in the computation of his
retirement benefits pursuant to Sections 10 (b) and 2 (l) of
Republic Act (RA) No. 8291.6
The GSIS indorsed7 the Letter to the CSC with a view that the
same is within the jurisdiction of the latter.
The CSC, for its part, rendered Resolution No. 9919408 dated
August 31, 1999 denying petitioner’s request for reconsideration
of the subject CSC opinion, thus:
WHEREFORE, the Commission hereby resolves to deny the
instant request of Simeon Valdez. Accordingly, the assailed
Opinion is affirmed.
Petitioner then elevated the matter to the CA by way of petition
for review on certiorari against the CSC and the GSIS. There,
petitioner argued that his services rendered as Director of
MECO should have been credited for retirement purposes and
that his salary thereat should have been the highest remuneration
considered in the computation of his retirement benefits.
Petitioner likewise insisted that his respective tenures as
Member of the Board of Regents of Ilocos Norte Institute of
Technology (INIT) and the MMSU, as Director of the
PHIVIDEC and as OIC Vice-Governor of Ilocos Norte be
included as government service in the computation of his
retirement benefits.
On July 31, 2000, the CA rendered the herein challenged
decision dismissing the petition and affirming both the January
14, 1999 Opinion and Resolution No. 991940 of the CSC.
Dispositively, the Decision reads:
With the foregoing, the assailed CSC Opinion dated 14 January
1999 and Resolution No. 991940 dated 31 August 1999 are
hereby AFFIRMED.
SO ORDERED.
Thereafter, petitioner filed a motion for reconsideration of the
foregoing decision and for the first time raised as an issue the
lack of jurisdiction of the CSC and the CA over the case.
P a g e 2 | 20
In the resolution of October 17, 2000, the CA denied
petitioner’s motion for reconsideration.
Petitioner now comes to this Court via this petition for
certiorari. Although the CSC was the author of the challenged
issuances which were affirmed by the CA and in fact it was a
respondent in the case below, it was not impleaded in the instant
petition. Petitioner now lays all the blame on the GSIS as he
raises the following assigned errors:
I.
THE INDORSEMENT OF THE GSIS OF PETITIONER’S
CLAIM FOR RETIREMENT BENEFITS TO THE CSC
SUFFERS JURAL INFIRMITY AND ALL THE RESULTING
CSC PROCEEDINGS AND RESOLUTIONS THEREON ARE
NULL AND VOID AB INITIO, INCLUDING THE NOW
QUESTIONED COURT OF APPEALS DECISION AND
RESOLUTION (ANNEXES A AND B), FOR LACK OF
JURISDICTION.
II.
ASSUMING THAT CSC AND THE COURT OF APPEALS
HAVE JURISDICTION, THE HOLDING THAT
PETITIONER’S CLAIM FOR RETIREMENT BENEFITS
HAD ALREADY PRESCRIBED IS DEFINITELY A LEGAL
ERROR.
III.
ASSUMING THAT CSC AND THE COURT OF APPEALS
HAVE JURISDICTION, THE DENIAL OF THE
ACCREDITATION OF PETITONER’S SERVICES
RENDERED WITH MECO IS PLAINLY A LEGAL ERROR.
IV.
THE LACK OF JURISDICTION EXTENDS TO THE COURT
OF APPEALS’ AFFIRMING THE EXCLUSION OF
PETITIONER’S SERVICES RENDERED WITH INIT,
MMMCST, MMSU, PHIVEDEC AND OIC VICE-
GOVERNOR OF ILOCOS NORTE.
V.
THE LACK OF JURISDICTION OF THE CSC AND THE
COURT OF APPEALS, LAWLESSLY DEPRIVED
02 OCTOBER 2017
PETITIONER THE RIGHT TO A RETIREMENT BENEFITS
COMPUTED AT HIS HIGHEST SALARY RATE WITH
MECO.
The petition is utterly bereft of merit.
First off, petitioner’s argument that the GSIS violated RA No.
8291 when it indorsed petitioner’s claim to the CSC for
resolution is untenable. Section 10 of RA No. 8291, otherwise
known as the "Government Service Insurance System Act of
1997," explicitly authorizes the GSIS and the CSC to work hand
in hand in the computation of service in the government for the
purpose of availment of the retirement benefits under the said
Act. Pertinently, the said Act provides:
Sec. 10. Computation of Service.―(a) The computation of
service for the purpose of determining the amount of benefits
payable under this Act shall be from the date of original
appointment/election, including periods of service at different
times under one or more employers, those performed overseas
under the authority of the Republic of the Philippines, and those
that may be prescribed by the GSIS in coordination with the
Civil Service Commission.
Besides, the petitioner himself sought the CSC’s opinion on
matters related to his application for retirement. He too filed a
motion for the CSC to reconsider its opinion. Surely, the GSIS
could not be faulted for merely referring his letter seeking
reconsideration of the CSC opinion which was addressed to the
GSIS, stated, "I respectfully seek to reconsider the denial of the
Chairman of the Civil Service Commission of the other benefits
xxx." Moreover, the GSIS’ action on petitioner’s claim relied on
the CSC’s Opinion.9 Unless the CSC would reconsider or revise
its earlier opinion, which it did not, it was unlikely for the GSIS
to reconsider its previous opinion, given the statutory mandate
for the said two institutions of government to coordinate on the
matter of computation of government services of retirees.
While it is a rule that jurisdictional question may be raised at
any time, this, however, admits of an exception where, as in this
case, estoppel has supervened. The Court has, time and again,
frowned upon the undesirable practice of a party submitting his
case for decision and then accepting the judgment only if
favorable, and attacking it for lack of jurisdiction when
adverse.10
Secondly, petitioner argues that the CSC and the CA
erroneously held that his claim had already prescribed. A
LAW ON PUBLIC CORPORATION
perusal of the record shows that no such finding was ever made,
neither by the CSC in its January 14, 1999 Opinion and
Resolution No. 991940 nor by the CA in the herein challenged
July 31, 2000 Decision in CA-G.R. SP No. 54870, as reiterated
the resolution of October 17, 2000.
The remaining three assigned errors being interrelated, we shall
address them together. Petitioner would have the Court reverse
the CA’s rejecting his assertion that his services rendered in the
MECO, MMSU, PHIVIDEC and as OIC Vice-Governor of
Ilocos Norte should be credited in the computation of his
retirement benefits. We are not convinced for two reasons. First,
the assailed CA decision affirming the impugned CSC issuances
is anchored on law and jurisprudence. Thus, we quote with
approval the following excerpt from the decision of the CA:
None other than the 1987 Constitution of the Philippines, the
Highest Law of the Land, confines the scope of the civil service
as embracing "all the branches, subdivisions, instrumentalities
and agencies of the government, including government-owned
and controlled corporations with original charters."
xxx
In Philippine National Company-Energy Development
Corporation v. Leogardo, 175 SCRA 26, 30 (1989), the
Supreme Court categorically ruled that "under the present law,
the test in determining whether a government-owned or
controlled corporation is subject to the Civil Service Law is the
manner of its creation such that government corporations
created by special charter are subject to its provision while those
incorporated under the General Corporation Law are not within
its coverage."
With this in mind, the CSC was not in error in holding that:
"It is noted that MECO was created before the effectivity of the
1987 Constitution. In this regard, granting without admitting
that at the time of its incorporation (during the effectivity of the
1973 Constitution) MECO was yet under the coverage of the
Philippine Civil Service, the appellant’s (i.e., petitioner’s
services rendered thereat for that period, however, still cannot
be accredited as government service because at the time of his
retirement/filing of the case/complaint, the abovequoted
provision (i.e., Section 2(1), Article IX) of the 1987 Constitution
has already come into effect. As held by the Honorable Supreme
Court in Lumanta, et al. vs. National Labor Relations
Commission and Food Terminal, Inc. (170 SCRA 79),
P a g e 3 | 20
‘jurisdiction is determined as of the time of the filing of the
complaint.’"
The established rule is that the statute (in this case, the
Constitution) in force at the time of the commencement of the
action determines the jurisdiction of the court (in this case, the
administrative body).
It was likewise no error for the CSC to deny accreditation of
petitioner’s services rendered for MMSU, PHIVIDEC and INIT,
concurrently, because of the lack of sufficient basis to compute
services rendered therefor converted to their full-time
equivalent, reckoned in hours or days actually rendered, using a
Forty-(40) hour week and 52 weeks a year as basis, in
accordance with Section 5.3, Rule V of the Rules and
Regulations Implementing the Government Service Insurance
System Act of 1997.
Relevantly, the last paragraph of Section 10 of RA No. 8291
dictates that for purposes of computation of government service,
only full-time services with compensation are included:
For the purpose of this section, the term service shall include
full time service with compensation: Provided, That part time
and other services with compensation may be included under
such rules and regulations as may be prescribed by the GSIS.
While petitioner invokes the proviso in the above-quoted
provision of law, the GSIS, which has been given the authority
to include part-time services in the computation, has pointed out
that the services in the MMSU, PHIVIDEC and as OIC Vice-
Governor of Ilocos Norte cannot be credited because, aside from
having been rendered part-time in said agencies, the said
positions were without compensation as defined in Section 2(i)
of RA No. 8291.11
Petitioner’s insistence that the emoluments he received as
MECO director be the basis in the computation of his retirement
benefits, the same being the highest basic salary rate, is
unavailing. Indeed, the salaries that he received at the time he
served as MECO director were unusually high for any position
covered by the civil service. Petitioner received a monthly pay
of P40,000.00 in addition to a P65,000.00 representation and
travel allowance and US$2,500.00 per diem for overseas board
meetings. The Constitution itself mandated the standardization
of compensation of government officials and employees covered
by the civil service under Article IX B, Section 5, viz:
02 OCTOBER 2017
Sec. 5. The Congress shall provide for the standardization of
compensation of government officials and employees, including
those in government-owned or controlled corporations with
original charters, taking into account the nature of the
responsibilities pertaining to, and the qualifications required for
their positions.
The salary received by petitioner during his stint at MECO
appears to be way beyond that authorized by RA No. 6758,12
otherwise known as the Salary Standardization Law. For this
reason, it is doubtful that petitioner’s employment with the
MECO is embraced by the civil service. Otherwise, the salary
rate received by petitioner from MECO would not have been
legally feasible, unless there was a law exempting the MECO
from the Salary Standardization Law.
Finally, the instant petition purports to be a petition for certiorari
under Rule 65 of the Rules of Court. However, a cursory
reading of the issues raised discloses that petitioner’s arguments
are not anchored on lack of jurisdiction but on questions of law
which fall within the realm of petitions for review on certiorari
under Rule 45 of the Rules of Court.
It is an elementary principle that a petition for certiorari under
Rule 65 cannot be used if the proper remedy is appeal. Being an
extraordinary remedy, a party can only avail himself of
certiorari, if there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law.13 Here, appeal
is the correct mode but was not seasonably utilized by the
petitioner. Resort to this petition for certiorari is, therefore,
improper because certiorari cannot be used as a substitute for a
lost remedy of appeal.14 Petitions for certiorari are limited to
resolving only errors of jurisdiction. It is not to stray at will and
resolve questions or issues beyond its competence such as errors
of judgment. For, it is basic that certiorari under Rule 65 is a
remedy narrow in scope and inflexible in character. It is not a
general utility tool in the legal workshop.15 It offers only a
limited form of review. Its principal function is to keep an
inferior tribunal within its jurisdiction. It can be invoked only
for an error of jurisdiction, that is, one where the act complained
of was issued by the court, officer or a quasi-judicial body
without or in excess of jurisdiction, or with grave abuse of
discretion which is tantamount to lack or in excess of
jurisdiction. It is not to be used for any other purpose, such as to
cure errors in proceedings or to correct erroneous conclusions of
law or fact, as what petitioner would like the Court to venture
into. A petition for certiorari not being the proper remedy to
correct errors of judgment as alleged in the instant case, the
LAW ON PUBLIC CORPORATION
herein petition should be dismissed pursuant to SC Circular No.
2-90.16
WHEREFORE, in view of the foregoing, the petition is
DISMISSED and the assailed decision and resolution of the CA
are AFFIRMED.
SO ORDERED.
G.R. No. L-49535 October 28, 1988*
ROMANA M. CRUZ, petitioner,
vs.
HON. FRANCISCO TANTUICO and HON. GREGORIO
G. MENDOZA, in their capacity as Acting Chairman and
Treasurer of the Philippines of the Commission on Audit
and the Bureau of Treasury, respondents.
The relief sought from the Court, in addition to the setting aside
of certain orders of respondent COA Acting Chairman, is the
issuance of an order for the release of petitioner's retirement
benefits. Preliminary to the grant or denial thereof, this Court is
asked to pass upon the liability of petitioner Romana M. Cruz
for paying upon presentment several treasury warrants with a
total value of P21,545.08, but which turned out to be issued to
fictitious payees.
An investigation of the anomaly revealed that it was the
handiwork of a "syndicate" composed of employees of the
Budget Commission and the Department of Education and
Culture (DEC). Using falsified computations and service
records, some sixty-eight (68) treasury warrants were issued and
made payable to fictitious or "ghost" teachers in Region IX
(Zamboanga del Sur), all of which appeared to be genuine and
duly signed by the authorized signatories of the DEC. Twenty-
eight (28) of these warrants are the subject of this case.
Acting on the request of the Treasurer of the Philippines that the
encashment of the treasury warrants be dishonored and that the
appropriate "charge back be undertaken, the National Cashier
recommended that action to effect restitution be taken against
the parties to the falsification, particularly, Editha Gonzales and
Ceferino M. Cruz, instead of proceeding against Romana Cruz
who was considered to have done her routine task as paying
teller and to have acted in good faith in encashing the treasury
warrants [Rollo, pp. 36-37.]
Subsequently, however, the Auditor assigned to the Treasury
Vault and Banking Audit Division of the Bureau of Treasury
P a g e 4 | 20
requested the National Cashier to "cause the dishonor of the
subject warrants and the encashment thereof charged back to the
account of the banks concerned or to Miss Cruz, as the case may
be." [Rollo, p. 38.] The first charge back against Miss Cruz as
made on August 17, 1976 in the amount of the P15,308.91 and
subsequently increased by P6,236.17 on August 23, 1976 thus
making her total cash accountabilities amount to P21,545.08.
The Auditor also formally demanded that petitioner produce the
missing funds while the Acting National Cashier required her to
increase her cash accountability [Rollo, p. 40.]
In her written explanations to these demands, petitioner stressed
that she paid the warrants in good faith as there was nothing on
their faces or in the endorsements to raise any doubt as to their
genuineness. Petitioner requested that in lieu of charging her for
the shortage, "the same be dropped from the cash book and
simultaneously recorded as a receivable (from the guilty
party/parties) on the books of the Bureau of Treasury [Rollo, pp.
41-42.]
Acting on the matter which was formally referred to him, the
respondent Commission on Audit (COA) Acting Chairman
issued the following:
2nd Indorsement
October 25, 1976
Respectfully returned, thru the Manager, Accountancy Office,
this Commission, to the Treasurer of the Philippines, Bureau of
the Treasury, Manila.
It appearing from these papers that it was Miss Romana Cruz,
Cashier IV, Cash Division, that Bureau, who paid the treasury
warrants in question totalling P21,545.08 to wrong or fictitious
payees and, therefore, is the last indorser liable for the value
thereof, it is hereby directed that she be required to restore and
restitute to that Bureau the said amount, without prejudice to her
right of recourse against the guarantors of said warrants, if any.
In case of failure of Miss Cruz to effect the restitution of said
amount as herein directed, her salary should be withheld
pursuant to Section 624 of the Revised Administrative Code and
applied in settlement of her liability.
Advice of the action taken herein is desired.
(Sgd.) Francisco S. Tantuico, Jr.
Acting Chairman
02 OCTOBER 2017
[Rollo, p. 50.]
Manifesting his disagreement with the above ruling, the
Treasurer under the 5th indorsement opined ". . . that the loss of
government funds arising from the encashment of the subject
treasury warrants as a result of the negligent act of the DEC in
issuing these treasury warrants to fictitious persons, should be
borne by the DEC and not by Miss Romana Cruz who paid them
in good faith and pursuant to her duty as Cashier IV of this
Treasury to pay treasury warrants and government checks
presented to her for payment." [Rollo, pp. 51-53.]
A request for reconsideration of the order of the respondent
COA Acting Chairman contained in the 2nd indorsement was
filed by petitioner on February 20, 1978. This was followed by a
request, sometime in August, 1978, addressed to the COA
Acting Chairman for the early issuance of a clearance in
connection with petitioner's retirement from the Bureau of
Treasury on March 30, 1978 [Rollo, p. 56.]
On November 27, 1978, petitioner received a letter from
respondent Treasurer dated November 13, 1978 informing her
that under the 8th indorsement, the COA Acting Chairman
denied her appeal and letter of reconsideration while reiterating
his previous directive under the 2nd indorsement. The
Treasurer's letter particularly stated:
xxx xxx xxx
This Treasury expressed its support to your representation under
its 5th indorsement to the Chairman of the Commission on
Audit dated November 18, 1977, xerox copy enclosed, but
unfortunately, the COA has a different view.
That being the case, much to our regret, the value of the subject
28 treasury warrants in the total amount of P21,545.08 is being
deducted from your retirement benefits from this Treasury, the
same to be applied in refund of your shortage of P21,545.08 in
your accountability, arising from the encashment of the said
subject 28 treasury warrants. [Rollo, p. 57.]
In this petition for review on certiorari, the petitioner seeks a
ruling setting aside the orders of the respondent COA Acting
Chairman contained in the 2nd and 8th indorsements and for the
release of the amount of P21,545.08 in her favor.
LAW ON PUBLIC CORPORATION
1. Petitioner denies any liability for the value of the
subject treasury warrants. Assailing the order of the respondent
COA Acting Chairman as embodied in the 2nd indorsement,
petitioner contends that basing her liability on the theory that
she was the last indorser thereof is erroneous, as she was not an
indorser.
The facts support the conclusion that petitioner was not an
indorser of the treasury warrants. Her only participation in the
encashment of the treasury warrants was in her capacity as
cashier or paying teller of the Bureau of Treasury. Her act of
paying the amounts reflected on the treasury warrants did not
constitute an indorsement but a discharge by payment of the
instruments.
Petitioner submits that since the questioned treasury warrants
were genuine in all respects, she had no way of determining
whether the same were payable to fictitious or non-existing
payees.
It is not disputed that on the face of the treasury warrants, there
appeared no irregularity The warrants were signed by the
authorized signatories of the DEC. Furthermore, Editha
Gonzales, the party who presented the treasury warrants for
encashment, was a bona fide employee of the DEC who
regularly cashed warrants with the petitioner and was therefore
known to her personally. Considering these circumstances, the
encashment by the petitioner of the subject treasury warrants did
not amount to an act of negligence for which she should be
made liable.
The view that petitioner had not been negligent is shared by the
Bureau itself, which has cleared her of any responsibility for the
defalcation. In the investigations conducted after discovery of
the anomaly, she was never implicated. Thus, when the
perpetrators were charged before the then Court of First Instance
of Manila for Estafa Thru Falsification on eighty-three (83)
counts, she was not included in the charge.
In behalf of the public respondents, the Solicitor General
counters that petitioner's failure as a paying teller to ascertain
that the person who presented the warrants was not a holder in
due course renders her liable for the value thereof,
notwithstanding that the third endorser who encashed the said
treasury warrants was known to her, and, therefore adequately
Identified. To support this contention, he cites the Manual of the
Bureau of Treasury which provides as follows:
P a g e 5 | 20
Sec. 3250.1. Requirements when party is an indorsee.—
When the party encashing the warrant or check is an indorsee,
he shall be referred first to the National Cashier before any
payment is made by the Paying Teller. The National Cashier
shall interview the party and should be satisfied that the party is
a holder in due course or has legal or rightful title to the
instrument. The encashing party should also be required to
present any of the documents (identification papers) enumerated
in Section 3250.0 above.
At this stage, Sec. 3250.1 of the Manual of the Bureau of
Treasury cannot be made the basis for holding the petitioner
liable considering the absence from the record of any mention of
any investigation concerning her possible liability under said
section. Thus, facts that would prove or disprove her liability
under this section were never established. Moreover, in the
series of indorsements by the public respondents leading to the
present case, See. 3250.1 was never mentioned as the basis for
petitioner's liability. In fact, the respondent COA Acting
Chairman ruled that petitioner was liable for a totally different
reason, i.e. that she was the last indorser of the treasury warrants
[Rollo, p. 50.] It is only now that she has brought her case
before this Court that petitioner is sought to be held liable on the
basis of Sec. 3250.1. This cannot be allowed, for otherwise it
would be tantamount to sanctioning a change of theory on
appeal, which would be unfair to the adverse party [Philippine
Rabbit Bus Lines, Inc. v. Phil-American Forwarders, Inc., G.R.
No. L-25142, March 25, 1975, 63 SCRA 231.]
Having established that petitioner was not negligent in
encashing the treasury warrants, justice dictates that she should
not be made personally liable for the consequent losses.
2. An analysis of the arguments presented as they relate
to the facts would show that the issue petitioner actually poses is
the propriety of the Treasurer's order to deduct the amount of
P21,545.08, the value of the twenty-eight (28) treasury warrants,
from her retirement benefits, as embodied in the Treasurer's
letter to her dated November 13, 1978 [Rollo, p. 57],
considering that nowhere is it stated in the COA Acting
Chairman's 2nd and 8th indorsements that the amount should be
deducted from her retirement benefits. In fact, the 2nd
indorsement provided that her salary should be withheld and
applied in settlement of her liability ** while the 8th
indorsement merely reiterated the 2nd [Rollo, pp. 50 and 59.]
Despite the orders of the Acting Chairman of the Commission
on Audit, petitioner's salaries prior to her retirement on March
02 OCTOBER 2017
30, 1978 were never withheld. Thus, the order of the Treasurer
to deduct the value of the treasury warrants from her retirement
benefits [Rollo, p. 57.]
Consequently, on March 30, 1978, petitioner applied with and
was cleared by the Bureau of Treasury from all money and
property responsibilities, except for the sum of P21,545.08
representing the value of the twenty-eight (28) treasury warrants
[Rollo, p. 123.] The Bureau of Treasury released to the
petitioner the sum of P23,980.77 under TW No. B-04,623,521,
dated January 2, 1979, as "retirement gratuity" [Rollo, p. 124.]
Presumably, since there was an order to deduct the amount of
P21,545.08 from her retirement benefits, the amount of
P23,980.77 released to her was only a portion of the total
amount she was entitled to.
As mentioned above, no neligence attended the petitioner's
encashment of the treasury warrants. Even assuming that. she
could be held liable for non- compliance with or violation of
some rule or regulation, this Court agrees with the petitioner that
Section 624 of the Revised Administrative Code cannot be
construed to authorize a deduction of the value of the treasury
warrants from her retirement benefits. Said section provides:
Sec. 624. Retention of salary for satisfaction of indebtedness.—
When any person is indebted to the Government of the
Philippine Islands (or Government of the United States), the
Insular Auditor may direct the proper officer to withhold the
payment of any money due him or his estate, the same to be
applied in satisfaction of such indebtedness.
The Solicitor General, in his comment, is in agreement with the
petitioner that her retirement pay may not be withheld by
administrative fiat to answer for the shortage incurred while in
office [Rollo, p. 99.] This has also been the interpretation
applied by the respondent COA Acting Secretary in similar
cases [Rollo, pp. 62-63.]
That the retirement pay accruing to a public officer may not be
withheld and applied to his indebtedness to the government is
settled. In Hunt v. Hernandez [G.R. No. 45665, 36 O.G. 263
(1937], the Court, through Justice Laurel, explained why.
The question to be determined is whether or not the gratuity of
the petitioner in this case can be withheld and applied to the
payment of his remaining indebtedness to the San Lazaro
Investment Fund notwithstanding the provision of section 3 of
Act No. 4051 that the gratuity provided for in this Act shall not
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be attached or levied upon execution. *** The respondents
contend that the withholding of the corresponding amount of the
petitioner's gratuity was made with a view to its application to
the payment of his indebtedness to the Government, and that
such action is authorized by section 624 of the Administrative
Code which provides that "When any person is indebted to the
government of the Philippine Islands or Government of the
United States, the Insular Auditor may direct the proper officer
to withhold the payment of any money due him or his estate, the
same to be applied in satisfaction of such indebtedness.
While Section 3 of Act No. 4051 refers merely to attachment or
levy upon execution, we are of the opinion that the exemption
should be liberally construed in favor of the pensioner. Pension
in this case is a bounty flowing from the graciousness of the
Government intended to reward past services and, at the same
time, to provide the pensioner with the means with which to
support himself and his family. Unless otherwise clearly
provided, the pension should insure wholly to the benefit of the
pensioner. It is true that the withholding and application of the
amount involved was had under section 624 of the
Administrative Code and not by any judicial process, but if the
gratuity could not be attached or levied upon execution in view
of the prohibition of section 3 of Act No. 4051, the
appropriation thereof by administrative action, if allowed, would
lead to the same prohibited result and enable the respondents to
do indirectly what they can not do directly under section 3 of
Act No. 4051. Act No. 4051 is a later statute having been
approved on February 21, 1933, whereas the Administrative
Code of 1917 which embodies section 624 relied upon by the
respondents was approved on March 10 of that year.
Considering section 3 of Act No. 4051 as an exception to the
general authority granted in section 624 of the Administrative
Code, antagonism between the two provisions is avoided. [Id. at
264; Emphasis supplied.]
WHEREFORE, the petition is GRANTED and the order of the
respondent COA Acting Chairman Francisco S. Tantuico Jr. to
withhold payment of petitioner's salary and the consequent
directive of the respondent Treasurer Gregorio G. Mendoza to
deduct the amount of P21,545.08 from petitioner's retirement
benefits are SET ASIDE. This decision is IMMEDIATELY
EXECUTORY.
SO ORDERED.
G.R. No. 96422 February 28, 1994
P a g e 6 | 20
 FRANCISCO S. TANTUICO, JR., petitioner,
vs.
HON. EUFEMIO DOMINGO, in his capacity as Chairman
of the Commission on Audit, ESTELITO SALVADOR,
MARGARITO SILOT, VALENTINA EUSTAQUIO,
ANICIA CHICO and GERMINIA PASCO, respondents.
This is a petition for certiorari, prohibition and mandamus, with
prayer for temporary restraining order or preliminary injunction,
under Rule 65 of the Revised Rules of Court.
The petition mainly questions the withholding of one-half of
petitioner's retirement benefits.
I liable for the loss thereof (Rollo, pp. 53-58).
On January 26, 1980, petitioner was appointed Chairman of the
Commission on Audit (COA) to serve a term of seven years
expiring on January 26, 1987. Petitioner had discharged the
functions of Chairman of the COA in an acting capacity since
1975.
On December 31, 1985, petitioner applied for clearance from all
money, property and other accountabilities in preparation for his
retirement. He obtained the clearance applied for, which covered
the period from 1976 to December 31, 1985. The clearance had
all the required signatures and bore a certification that petitioner
was "cleared from money, property and/or other accountabilities
by this Commission" (Rollo, p. 44).
After the EDSA Revolution, petitioner submitted his courtesy
resignation to President Corazon C. Aquino. He relinquished his
office to the newly appointed Chairman, now Executive
Secretary Teofisto Guingona, Jr. on March 10, 1986. That same
day, he applied for retirement effective immediately.
Petitioner sought a second clearance to cover the period from
January 1, 1986 to March 9, 1986. All the signatures necessary
to complete the second clearance, except that of Chairman
Guingona, were obtained. The second clearance embodies a
certificate that petitioner was "cleared from money, property
and/or accountability by this Commission" (Rollo, p. 49).
Chairman Guingona, however, failed to take any action thereon.
Chairman Guingona was replaced by respondent Chairman. A
year later, respondent Chairman issued COA Office Order No.
87-10182 (Rollo, p. 50), which created a committee to inventory
02 OCTOBER 2017
all equipment acquired during the tenure of his two
predecessors.
On May 7, 1987, respondent Chairman indorsed petitioner's
retirement application to the Government Service Insurance
System (GSIS), certifying, among other matters, that petitioner
was cleared of money and property accountability (Rollo, p. 52).
The application was returned to the COA pursuant to R.A. No.
1568, which vests in the COA the final approval thereof.
On September 25, 1987, the inventory committee finally
submitted its report, recommending petitioner's clearance from
property accountability inasmuch as there was no showing that
he personally gained from the missing property or was primarily
Not satisfied with the report, respondent Chairman issued a
Memorandum directing the inventory committee to explain why
no action should be filed against its members for failure to
complete a physical inventory and verification of all equipment;
for exceeding their authority in recommending clearances for
petitioner and Chairman Guingona; and for recommending
petitioner's clearance in total disregard of Section 102 of P.D.
No. 1445 (Government Auditing Code of the Philippines). The
members of the committee were subsequently administratively
charged.
On January 2, 1988, respondent Chairman created a special
audit team for the purpose of conducting a financial and
compliance audit of the COA transactions and accounts during
the tenure of petitioner from 1976 to 1984 (COA Office Order
88-10677; Rollo, pp. 66-67).
On February 28, 1989, the special audit team submitted its
report stating: (i) that the audit consisted of selective review of
post-audit transactions in the head offices and the State
Accounting and Auditing Center; (ii) that the audit disclosed a
number of deficiencies which adversely affected the financial
condition and operation of the COA, such as violations of
executive orders, presidential decrees and related rules and
regulations; and (iii) that there were some constraints in the
audit, such as the unavailability of records and documents, and
personnel movements and turnover. While the report did not
make any recommendation, it instead mentioned several
officials and employees, including petitioner, who may be
responsible or accountable for the questioned transactions
(Rollo, pp. 73, 147-151).
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Respondent Chairman rendered a Decision dated November 20,
1989, in the administrative case filed against the principal
members of the first inventory committee. He found them guilty
as charged and issued them a reprimand. The other members
were meted a stern warning, except for one who was exonerated
for not taking part in the preparation of the inventory report.
In a letter dated December 21, 1989, a copy of which was
received by petitioner on December 27, 1989, respondent
Chairman informed petitioner of the approval of his application
for retirement under R.A. No. 1568, effective as of March 9,
1986 (Rollo, pp. 68-69). However, respondent Chairman added:
. . . In view, however, of the audit findings and inventory report
adverted to above, payment of only one-half (½) of the money
value of the benefits due you by reason of such retirement will
be allowed, subject to the availability of funds and the usual
accounting and auditing rules. Payment of the balance of said
retirement benefits shall be subject to the final results of the
audit concerning your fiscal responsibility and/or accountability
as former Chairman of this Commission.
In a letter dated January 22, 1990, petitioner requested full
payment of his retirement benefits.
Petitioner was furnished a copy of the report of the special audit
team in the letter dated December 21, 1989 of respondent
Chairman on January 29, 1990, nearly a year after its
completion. Attached to a copy of the report was a letter dated
November 14, 1989 from respondent Chairman, who required
petitioner to submit his comment within 30 days (Rollo, p. 153).
Petitioner submitted a letter-complaint, wherein he cited certain
defects in the manner the audit was conducted. He further
claimed that the re-audit was not authorized by law since it
covered closed and settled accounts.
Upon petitioner's request, he was furnished a set of documents
which he needed to prepare his comment. He was likewise given
another 30-days to submit it.
A series of correspondence between petitioner and respondent
Chairman ensued. On September 10, 1990, petitioner requested
a copy of the working papers on which the audit report was
based. This was denied by respondent Chairman, who claimed
that under the State Audit Manual, access to the working paper
was restricted. Petitioner's reconsideration was likewise denied
P a g e 7 | 20
and he was given a non-extendible period of five days to submit
his comment.
Instead of submitting his comment, petitioner sought several
clarifications and specification, and requested for 90 days within
which to submit his comment, considering that the report
covered a ten-year period of post-audited transactions. Ignoring
petitioner's request, respondent Chairman demanded an
accounting of funds and a turn over of the assets of the Fiscal
Administration Foundation, Inc. within 30 days.
II
Petitioner then filed the instant petition. As prayed for by
petitioner, this Court issued a temporary restraining order on
January 17, 1991.
Petitioner argues that notwithstanding the two clearances
previously issued, and respondent Chairman's certification that
petitioner had been cleared of money and property
accountability, respondent Chairman still refuses to release the
remaining half of his retirement benefits — a purely ministerial
act.
Petitioner was already issued an initial clearance during his
tenure, effective December 31, 1985 (Rollo, p. 44). All the
required signatures were present "is cleared from money,
property and/or accountabilities by this commission" with the
following notation:
No property accountability under the Chairman's name as the
person. Final clearance as COA Chairman subject to the
completion of ongoing reconciliation of Accounting &
P(roperty) records and to complete turnover of COA property
assigned to him as agency head.
xxx xxx xxx
The responsibility of the Chairman for the disbursement and
collection accounts of this Commission for CYs Sept. '75 to
Aug. '85, were completely post-audited, however as of Dec. 31,
1985, the suspensions and disallowances in the amounts of
P36,196,962.11 and P28,762.36 respectively are still in the
process of settlement (Rollo, pp. 44-45).
Petitioner also applied for a second clearance to cover the period
from January 1 to March 9, 1986, which application had been
signed by all the officials, except the Chairman (Rollo, p. 49).
02 OCTOBER 2017
Whatever infirmities or limitations existed in said clearances
were cured after respondent Chairman favorably indorsed
petitioner's application for retirement to the Government Service
Insurance System and recommended its approval to take effect
on March 10, 1986. In said endorsement, respondent Chairman
made it clear that there were no pending administrative and
criminal cases against petitioner (Rollo, p. 52).
Regardless of petitioner's monetary liability to the government
that may be discovered from the audit concerning his fiscal
responsibility as former COA Chairman, respondent Chairman
cannot withhold the benefits due petitioner under the retirement
laws.
In Romana Cruz v. Hon. Francisco Tantuico, 166 SCRA 670
(1988), the National Treasurer withheld the retirement benefits
of an employee because of his finding that she negligently
allowed the anomalous encashment of falsified treasury
warrants.
In said case, where petitioner herein was one of the respondents,
we found that the employee had been cleared by the National
Treasurer from all money and property responsibility, and held
that the retirement pay accruing to a public officer may not be
withheld and applied to his indebtedness to the government.
In Tantuico, we cited Justice Laurel's essay on the rationale for
the benign ruling in favor of the retired employees, thus:
. . . Pension in this case is a bounty flowing from the
graciousness of the Government intended to reward past
services and, at the same time, to provide the pensioner with the
means with which to support himself and his family. Unless
otherwise clearly provided, the pension should inure wholly to
the benefit of the pensioner. It is true that the withholding and
application of the amount involved was had under Section 624
of the Administrative Code and not by any judicial process, but
if the gratuity could not be attached or levied upon execution in
view of the prohibition of Section 3 of Act No. 4051, the
appropriation thereof by administrative action, if allowed, would
lead to the same prohibited result and enable the respondent to
do indirectly what they can not do directly under Section 3 of
the Act No. 4051. Act No. 4051 is a later statute having been
approved on February 21, 1933, whereas the Administrative
Code of 1917 which embodies Section 624 relied upon by the
respondents was approved on March 10 of that year.
Considering Section 3 of Act No. 4051 as an exception to the
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general authority granted in Section 624 of the Administrative
Code, antagonism between the two provisions is avoided (Hunt
v. Hernandez, 64 Phil. 753 [1937]).
Under Section 4 of R.A. No. 1568 (An Act to Provide Life
Pension to the Auditor General and the Chairman or Any
Member of the Commission of Elections), the benefits granted
by said law to the Auditor General and the Chairman and
Members of the Commission on Elections shall not be subject to
garnishment, levy or execution. Likewise, under Section 33 of
P.D. No. 1146, as amended (The Revised Government Service
Insurance Act of 1977), the benefits granted thereunder "shall
not be subject, among others, to attachment, garnishment, levy
or other processes."
Well-settled is the rule that retirement laws are liberally
interpreted in favor of the retiree because the intention is to
provide for the retiree's sustenance and comfort, when he is no
longer capable of earning his livelihood (Profeta vs. Drilon, 216
SCRA 777 [1992]).
Petitioner also wants us to enjoin the re-audit of his fiscal
responsibility or accountability, invoking the following grounds:
1. The re-audit involved settled and closed accounts
which under Section 52 of the Audit Code can no longer be re-
opened and reviewed;
2. The re-audit was initiated by respondent Chairman
alone, and not by the Commission as a collegial body;
3. The report of the special audit team that recommended
the re-audit is faulty as the team members themselves admitted
several constraints in conducting the re-audit, e.g. unavailability
of the documents, frequent turn-over and movement of
personnel, etc.;
4. The re-audit covered transactions done even after
petitioner's retirement;
5. He was not given prior notice of the re-audit;
6. He was not given access to the working papers; and
7. Respondents were barred by res judicata from
proceeding with the re-audit (Rollo, pp. 19-40).
P a g e 8 | 20
The petition must fail insofar as it seeks to abort the completion
of the
re-audit. While at the beginning petitioner raised objections to
the manner the audit was conducted and the authority of
respondents to re-open the same, he subsequently cooperated
with the examination of his accounts and transactions as a COA
official.
With respect to the legal objections raised by petitioner to the
partial findings of the respondents with respect to his
accountability, such findings are still tentative. As petitioner has
requested, he is entitled to a reasonable time within which to
submit his comment thereon.
But in order to prepare his comment, petitioner should be given
access to the working papers used by the special audit team. The
audit report covered a period of ten years (1976-1985) and
involved numerous transactions. It would be unfair to expect
petitioner to comment on the COA's findings of the report
without giving him a chance to verify how those findings were
arrived at.
It has been seven years since petitioner's retirement. Since then
he was only paid half of his retirement benefits, with the other
half being withheld despite the issuance of two clearances and
the approval of his retirement application. As of the filing of this
petition on December 21, 1990, no criminal or administrative
charge had been filed against petitioner in connection with his
position as former Acting Chairman and Chairman of the COA.
WHEREFORE, the petition is GRANTED insofar as it seeks to
compel respondent Chairman of the COA to pay petitioner's
retirement benefits in full and his monthly pensions beginning in
March 1991.
The petition is DENIED insofar as it seeks to nullify COA
Office Order No. 88-10677 and the audit report dated February
28, 1989 but petitioner should be given full access to the
working papers to enable him to prepare his comment to any
adverse findings in said report. The temporary restraining order
is LIFTED.
SO ORDERED.
[G.R. No. 116422. November 4, 1996]
AVELINA B. CONTE and LETICIA BOISER-PALMA,
petitioners, vs. COMMISSION ON AUDIT (COA),
respondent.
02 OCTOBER 2017
Are the benefits provided for under Social Security System
Resolution No. 56 to be considered simply as financial
assistance for retiring employees, or does such scheme
constitute a supplementary retirement plan proscribed by
Republic Act No. 4968?
The foregoing question is addressed by this Court in resolving
the instant petition for certiorari which seeks to reverse and set
aside Decision No. 94-126[1]dated March 15, 1994 of
respondent Commission on Audit, which denied petitioners
request for reconsideration of its adverse ruling disapproving
claims for financial assistance under SSS Resolution No. 56.
The Facts
Petitioners Avelina B. Conte and Leticia Boiser-Palma were
former employees of the Social Security System (SSS) who
retired from government service on May 9, 1990 and September
13, 1992, respectively. They availed of compulsory retirement
benefits under Republic Act No. 660.[2]
In addition to retirement benefits provided under R.A. 660,
petitioners also claimed SSS financial assistance benefits
granted under SSS Resolution No. 56, series of 1971.
A brief historical backgrounder is in order. SSS Resolution No.
56,[3] approved on January 21, 1971, provides financial
incentive and inducement to SSS employees qualified to retire
to avail of retirement benefits under RA 660 as amended, rather
than the retirement benefits under RA 1616 as amended, by
giving them financial assistance equivalent in amount to the
difference between what a retiree would have received under
RA 1616, less what he was entitled to under RA 660. The said
SSS Resolution No. 56 states:
RESOLUTION NO. 56
WHEREAS, the retirement benefits of SSS employees are
provided for under Republic Acts 660 and 1616 as amended;
WHEREAS, SSS employees who are qualified for compulsory
retirement at age 65 or for optional retirement at a lower age are
entitled to either the life annuity under R.A. 660, as amended, or
the gratuity under R.A. 1616, as amended;
WHEREAS, a retirement benefit to be effective must be a
periodic income as close as possible to the monthly income that
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would have been due to the retiree during the remaining years of
his life were he still employed;
WHEREAS, the life annuity under R.A. 660, as amended, being
closer to the monthly income that was lost on account of old age
than the gratuity under R.A. 1616, as amended, would best serve
the interest of the retiree;
WHEREAS, it is the policy of the Social Security Commission
to promote and to protect the interest of all SSS employees, with
a view to providing for their well-being during both their
working and retirement years;
WHEREAS, the availment of life annuities built up by
premiums paid on behalf of SSS employees during their
working years would mean more savings to the SSS;
WHEREAS, it is a duty of the Social Security Commission to
effect savings in every possible way for economical and
efficient operations;
WHEREAS, it is the right of every SSS employee to choose
freely and voluntarily the benefit he is entitled to solely for his
own benefit and for the benefit of his family;
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;
RESOLVED, FURTHER, That SSS employees who availed
themselves of the said life annuity, in appreciation and
recognition of their long and faithful service, be granted
financial assistance equivalent to the gratuity plus return of
contributions under R.A. 1616, as amended, less the five year
guaranteed annuity under R.A. 660, as amended;
RESOLVED, FINALLY, That the Administrator be authorized
to act on all applications for retirement submitted by SSS
employees and subject to availability of funds, pay the
corresponding benefits in addition to the money value of all
accumulated leaves. (underscoring supplied)
Long after the promulgation of SSS Resolution No. 56,
respondent Commission on Audit (COA) issued a ruling,
captioned as 3rd Indorsement dated July 10, 1989,[4]
P a g e 9 | 20
disallowing in audit all such claims for financial assistance
under SSS Resolution No. 56, for the reason that: --
x x x the scheme of financial assistance authorized by the SSS is
similar to those separate retirement plan or incentive/separation
pay plans adopted by other government corporate agencies
which results in the increase of benefits beyond what is allowed
under existing retirement laws. In this regard, attention x x x is
invited to the view expressed by the Secretary of Budget and
Management dated February 17, 1988 to the COA General
Counsel against the proliferation of retirement plans which, in
COA Decision No. 591 dated August 31, 1988, was concurred
in by this Commission. x x x.
Accordingly, all such claims for financial assistance under SSS
Resolution No. 56 dated January 21, 1971 should be disallowed
in audit. (underscoring supplied)
Despite the aforequoted ruling of respondent COA, then SSS
Administrator Jose L. Cuisia, Jr. nevertheless wrote[5] on
February 12, 1990 then Executive Secretary Catalino Macaraig,
Jr., seeking presidential authority for SSS to continue
implementing its Resolution No. 56 dated January 21, 1971
granting financial assistance to its qualified retiring employees.
However, in a letter-reply dated May 28, 1990,[6] then
Executive Secretary Macaraig advised Administrator Cuisia that
the Office of the President is not inclined to favorably act on the
herein request, let alone overrule the disallowance by COA of
such claims, because, aside from the fact that decisions, order or
actions of the COA in the exercise of its audit functions are
appealable to the Supreme Court[7] pursuant to Sec. 50 of PD
1445, the benefits under said Res. 56, though referred to as
financial assistance, constituted additional retirement benefits,
and the scheme partook of the nature of a supplementary
pension/retirement plan proscribed by law.
The law referred to above is RA 4968 (The Teves Retirement
Law), which took effect June 17, 1967 and amended CA 186
(otherwise known as the Government Service Insurance Act, or
the GSIS Charter), making Sec. 28 (b) of the latter act read as
follows:
(b) Hereafter, no insurance or retirement plan for officers or
employees shall be created by employer. All supplementary
retirement or pension plans heretofore in force in any
government office, agency or instrumentality or corporation
owned or controlled by the government, are hereby declared
02 OCTOBER 2017
inoperative or abolished; Provided, That the rights of those who
are already eligible to retire thereunder shall not be affected.
(underscoring supplied)
On January 12, 1993, herein petitioners filed with respondent
COA their letter-appeal/protest[8] seeking reconsideration of
COAs ruling of July 10, 1989 disallowing claims for financial
assistance under Res. 56.
On November 15, 1993, petitioner Conte sought payment from
SSS of the benefits under Res. 56. On December 9, 1993, SSS
Administrator Renato C. Valencia denied[9] the request in
consonance with the previous disallowance by respondent COA,
but assured petitioner that should the COA change its position,
the SSS will resume the grant of benefits under said Res. 56.
On March 15, 1994, respondent COA rendered its COA
Decision No. 94-126 denying petitioners request for
reconsideration.
Thus this petition for certiorari under Rule 65 of the Rules of
Court.
The Issues
The issues[10] submitted by petitioners may be simplified and
re-stated thus: Did public respondent abuse its discretion when it
disallowed in audit petitioners claims for benefits under SSS
Res. 56?
Petitioners argue that the financial assistance under Res. 56 is
not a retirement plan prohibited by RA 4968, and that Res. 56
provides benefits different from and aside from what a retiring
SSS employee would be entitled to under RA 660. Petitioners
contend that it is a social amelioration and economic upliftment
measure undertaken not only for the benefit of the SSS but more
so for the welfare of its qualified retiring employees. As such, it
should be interpreted in a manner that would give the x x x most
advantage to the recipient -- the retiring employees whose
dedicated, loyal, lengthy and faithful service to the agency of
government is recognized and amply rewarded -- the rationale
for the financial assistance plan. Petitioners reiterate the
argument in their letter dated January 12, 1993 to COA that:
Motivation can be in the form of financial assistance, during
their stay in the service or upon retirement, as in the SSS
Financial Assistance Plan. This is so, because Government has
to have some attractive remuneration programs to encourage
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well-qualified personnel to pursue a career in the government
service, rather than in the private sector or in foreign
countries ...
A more developmental view of the financial institutions grant of
certain forms of financial assistance to its personnel, we believe,
would enable government administrators to see these financial
forms of remuneration as contributory to the national
developmental efforts for effective and efficient administration
of the personnel programs in different institutions.[11]
The Courts Ruling
Petitioners contentions are not supported by law. We hold that
Res. 56 constitutes a supplementary retirement plan.
A cursory examination of the preambular clauses and provisions
of Res. 56 provides a number of clear indications that its
financial assistance plan constitutes a supplemental
retirement/pension benefits plan. In particular, the fifth
preambular clause which provides that it is the policy of the
Social Security Commission to promote and to protect the
interest of all SSS employees, with a view to providing for their
well-being during both their working and retirement years, and
the wording of the resolution itself which states Resolved,
further, that SSS employees who availed themselves of the said
life annuity (under RA 660), in appreciation and recognition of
their long and faithful service, be granted financial assistance x
x x can only be interpreted to mean that the benefit being
granted is none other than a kind of amelioration to enable the
retiring employee to enjoy (or survive) his retirement years and
a reward for his loyalty and service. Moreover, it is plain to see
that the grant of said financial assistance is inextricably linked
with and inseparable from the application for and approval of
retirement benefits under RA 660, i.e., that availment of said
financial assistance under Res. 56 may not be done
independently of but only in conjunction with the availment of
retirement benefits under RA 660, and that the former is in
augmentation or supplementation of the latter benefits.
Likewise, then SSS Administrator Cuisias historical overview of
the origins and purpose of Res. 56 is very instructive and sheds
much light on the controversy:[12]
Resolution No. 56, x x x, applies where a retiring SSS employee
is qualified to claim under either RA 660 (pension benefit, that
is, 5 year lump sum pension and after 5 years, life time pension),
or RA 1616 (gratuity benefit plus return of contribution), at his
P a g e 10 | 20
option. The benefits under RA 660 are entirely payable by GSIS
while those under RA 1616 are entirely shouldered by SSS
except the return of contribution by GSIS.
Resolution No. 56 came about upon observation that qualified
SSS employees have invariably opted to retire under RA 1616
instead of RA 660 because the total benefit under the former is
much greater than the 5-year lump sum under the latter. As a
consequence, the SSS usually ended up virtually paying the
entire retirement benefit, instead of GSIS which is the main
insurance carrier for government employees. Hence, the
situation has become so expensive for SSS that a study of the
problem became inevitable.
As a result of the study and upon the recommendation of its
Actuary, the SSS Management recommended to the Social
Security Commission that retiring employees who are qualified
to claim under either RA 660 or 1616 should be encouraged to
avail for themselves the life annuity under RA 660, as amended,
with the SSS providing a financial assistance equivalent to the
difference between the benefit under RA 1616 (gratuity plus
return of contribution) and the 5-year lump sum pension under
RA 660.
The Social Security Commission, as the policy-making body of
the SSS approved the recommendation in line with its mandate
to insure the efficient, honest and economical administration of
the provisions and purposes of this Act. (Section 3 (c) of the
Social Security Law).
Necessarily, the situation was reversed with qualified SSS
employees opting to retire under RA No. 660 or RA 1146
instead of RA 1616, resulting in substantial savings for the SSS
despite its having to pay financial assistance.
Until Resolution No. 56 was questioned by COA. (underscoring
part of original text; italics ours)
Although such financial assistance package may have been
instituted for noble, altruistic purposes as well as from self-
interest and a desire to cut costs on the part of the SSS,
nevertheless, it is beyond any dispute that such package
effectively constitutes a supplementary retirement plan. The fact
that it was designed to equalize the benefits receivable from RA
1616 with those payable under RA 660 and make the latter
program more attractive, merely confirms the foregoing finding.
02 OCTOBER 2017
That the Res. 56 package is labelled financial assistance does
not change its essential nature. Retirement benefits are, after all,
a form of reward for an employees 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.[13] 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.[14]
Is SSS Resolution No. 56 then within the ambit of and thus
proscribed by Sec. 28 (b) of CA 186 as amended by RA 4968?
We answer in the affirmative. Said 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. It is beyond
cavil that Res. 56 contravenes the said provision of law and is
therefore invalid, void and of no effect. 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.
We are not unmindful of the laudable purposes for promulgating
Res. 56, and the positive results it must have had, not only in
reducing costs and expenses on the part of the SSS in
connection with the pay-out of retirement benefits and
gratuities, but also in improving the quality of life for scores of
retirees. But it is simply beyond dispute that the SSS had no
authority to maintain and implement such retirement plan,
particularly in the face of the statutory prohibition. The SSS
cannot, in the guise of rule-making, legislate or amend laws or
worse, render them nugatory.
It is doctrinal that in case of conflict between a statute and an
administrative order, the former must prevail.[15] A rule or
regulation must conform to and be consistent with the
provisions of the enabling statute in order for such rule or
regulation to be valid.[16] The rule-making power of a public
administrative body is a delegated legislative power, which it
may not use either to abridge the authority given it by the
Congress or the Constitution or to enlarge its power beyond the
scope intended. Constitutional and statutory provisions control
LAW ON PUBLIC CORPORATION
with respect to what rules and regulations may be promulgated
by such a body, as well as with respect to what fields are subject
to regulation by it. It may not make rules and regulations which
are inconsistent with the provisions of the Constitution or a
statute, particularly the statute it is administering or which
created it, or which are in derogation of, or defeat, the purpose
of a statute.[17] Though well-settled is the rule that retirement
laws are liberally interpreted in favor of the retiree,[18]
nevertheless, there is really nothing to interpret in either RA
4968 or Res. 56, and correspondingly, the absence of any doubt
as to the ultra-vires nature and illegality of the disputed
resolution constrains us to rule against petitioners.
As a necessary consequence of the invalidity of Res. 56, we can
hardly impute abuse of discretion of any sort to respondent
Commission for denying petitioners request for reconsideration
of the 3rd Indorsement of July 10, 1989. On the contrary, we
hold that public respondent in its assailed Decision acted with
circumspection in denying petitioners claim. It reasoned thus:
After a careful evaluation of the facts herein obtaining, this
Commission finds the instant request to be devoid of merit. It
bears stress that the financial assistance contemplated under SSS
Resolution No. 56 is granted to SSS employees who opt to retire
under R.A. No. 660. In fact, by the aggrieved parties own
admission (page 2 of the request for reconsideration dated
January 12, 1993), it is a financial assistance granted by the SSS
management to its employees, in addition to the retirement
benefits under Republic Act No. 660. (underscoring supplied for
emphasis) There is therefore no question, that the said financial
assistance partakes of the nature of a retirement benefit that has
the effect of modifying existing retirement laws particularly
R.A. No. 660.
Petitioners also asseverate that the scheme of financial
assistance under Res. 56 may be likened to the monetary
benefits of government officials and employees who are paid,
over and above their salaries and allowances as provided by
statute, an additional honorarium in varying amounts. We find
this comparison baseless and misplaced. As clarified by the
Solicitor General:[19]
Petitioners comparison of SSS Resolution No. 56 with the
honoraria given to government officials and employees of the
National Prosecution Service of the Department of Justice,
Office of the Government Corporate Counsel and even in the
Office of the Solicitor General is devoid of any basis. The
monetary benefits or honoraria given to these officials or
P a g e 11 | 20
employees are categorized as travelling and/or representation
expenses which are incurred by them in the course of handling
cases, attending court/administrative hearings, or performing
other field work. These monetary benefits are given upon
rendition of service while the financial benefits under SSS
Resolution No. 56 are given upon retirement from service.
In a last-ditch attempt to convince this Court that their position
is tenable, petitioners invoke equity. They believe that they are
deserving of justice and equity in their quest for financial
assistance under SSS Resolution No. 56, not so much because
the SSS is one of the very few stable agencies of government
where no doubt this recognition and reputation is earned x x x
but more so due to the miserable scale of compensation granted
to employees in various agencies to include those obtaining in
the SSS.[20]
We must admit we sympathize with petitioners in their financial
predicament as a result of their misplaced decision to avail of
retirement benefits under RA 660, with the false expectation that
financial assistance under the disputed Res. 56 will also
materialize. Nevertheless, this Court has always held that equity,
which has been aptly described as justice outside legality, is
applied only in the absence of, and never against, statutory law
or judicial rules of procedure.[21] In this case, equity cannot be
applied to give validity and effect to Res. 56, which directly
contravenes the clear mandate of the provisions of RA 4968.
Likewise, we cannot but be aware that the clear imbalance
between the benefits available under RA 660 and those under
RA 1616 has created an unfair situation for it has shifted the
burden of paying such benefits from the GSIS (the main
insurance carrier of government employees) to the SSS. Without
the corrective effects of Res. 56, all retiring SSS employees
without exception will be impelled to avail of benefits under RA
1616. The cumulative effect of such availments on the financial
standing and stability of the SSS is better left to actuarians. But
the solution or remedy for such situation can be provided only
by Congress. Judicial hands cannot, on the pretext of showing
concern for the welfare of government employees, bestow
equity contrary to the clear provisions of law.
Nevertheless, insofar as herein petitioners are concerned, this
Court cannot just sit back and watch as these two erstwhile
government employees, who after spending the best parts of
their lives in public service have retired hoping to enjoy their
remaining years, face a financially dismal if not distressed
future, deprived of what should have been due them by way of
02 OCTOBER 2017
additional retirement benefits, on account of a bureaucratic boo-
boo improvidently hatched by their higher-ups. It is clear to our
mind that petitioners applied for benefits under RA 660 only
because of the incentives offered by Res. 56, and that absent
such incentives, they would have without fail availed of RA
1616 instead. We likewise have no doubt that petitioners are
simply innocent bystanders in this whole bureaucratic rule-
making/financial scheme-making drama, and that therefore, to
the extent possible, petitioners ought not be penalized or made
to suffer as a result of the subsequently determined invalidity of
Res. 56, the promulgation and implementation of which they
had nothing to do with.
And here is where equity may properly be invoked: since SSS
employees who are qualified for compulsory retirement at age
65 or for optional retirement at a lower age are entitled to either
the life annuity under R.A. 660, as amended, or the gratuity
under R.A. 1616, as amended,[22] it appears that petitioners,
being qualified to avail of benefits under RA 660, may also
readily qualify under RA 1616. It would therefore not be
misplaced to enjoin the SSS to render all possible assistance to
petitioners for the prompt processing and approval of their
applications under RA 1616, and in the meantime, unless barred
by existing regulations, to advance to petitioners the difference
between the amounts due under RA 1616, and the amounts they
already obtained, if any, under RA 660.
WHEREFORE, the petition is hereby DISMISSED for lack of
merit, there having been no grave abuse of discretion on the part
of respondent Commission. The assailed Decision of public
respondent is AFFIRMED, and SSS Resolution No. 56 is hereby
declared ILLEGAL, VOID AND OF NO EFFECT. The SSS is
hereby urged to assist petitioners and facilitate their applications
under RA 1616, and to advance to them, unless barred by
existing regulations, the corresponding amounts representing the
difference between the two benefits programs. No costs.
SO ORDERED.
GOVERNMENT SERVICE INSURANCE SYSTEM
(GSIS), HERMOGENES D. CONCEPCION, JR.,
WINSTON F. GARCIA, REYNALDO P. PALMIERY,
LEOVIGILDO P. ARRELLANO, ELMER T. BAUTISTA,
LEONORA V. DE JESUS, FULGENCIO S. FACTORAN,
FLORINO O. IBAEZ, AIDA C. NOCETE, AURORA P.
MATHAY, ENRIQUETA DISUANCO, AMALIO
MALLARI, LOURDES PATAG, RICHARD M.
MARTINEZ, ASUNCION C. SINDAC, GLORIA D.
LAW ON PUBLIC CORPORATION
CAEDO, ROMEO C. QUILATAN, ESPERANZA
FALLORINA, LOLITA BACANI, ARNULFO
MADRIAGA, LEOCADIA S. FAJARDO, BENIGNO
BULAONG, SHIRLEY D. FLORENTINO, and LEA M.
MENDIOLA,
Petitioners,
- versus -
COMMISSION ON AUDIT (COA), AMORSONIA B.
ESCARDA, MA. CRISTINA D. DIMAGIBA, and
REYNALDO P. VENTURA,
Respondents.
G. R. No. 162372
Promulgated:
October 19, 2011
This is a petition for review on certiorari under Rule 64 in
relation to Rule 65 of the 1997 Rules of Court to annul and set
aside the Commission on Audits Decision Nos. 2003-062 and
2004-004 dated March 18, 2003 and January 27, 2004,
respectively, for having been made without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction.
The Government Service Insurance System (GSIS) is joined by
its Board of Trustees and officials, namely: Chairman
Hermogenes D. Concepcion, Jr.; Vice-Chairman and President
and General Manager Winston F. Garcia (Garcia); Executive
Vice President and Chief Operating Officer Reynaldo P.
Palmiery; Trustees Leovigildo P. Arrellano, Elmer T. Bautista,
Leonora V. de Jesus, Fulgencio S. Factoran, Florino O. Ibaez,
and Aida C. Nocete; Senior Vice Presidents Aurora Mathay,
Enriqueta Disuangco, Amalio Mallari, Lourdes Patag, and
Asuncion C. Sindac; Vice Presidents Richard Martinez, Romeo
C. Quilatan, and Gloria D. Caedo; and Managers Esperanza
Fallorina, Lolita Bacani, Arnulfo Madriaga, Leocadia S.
Fajardo, Benigno Bulaong, Shirley D. Florentino, and Lea M.
Mendiola, together with all other officials and employees held
liable by the Commission on Audit (COA) as petitioners in this
case.[1]
The respondents in this petition are: the COA; its Director of
Corporate Audit Office (CAO) I, Amorsonia B. Escarda
(Escarda), who rendered CAO I Decision No. 2002-009 dated
May 27, 2002; the former Corporate Auditor of GSIS, Ma.
Cristina D. Dimagiba (Dimagiba), who issued the Notices of
Disallowance subject of CAO I Decision No. 2002-009; and the
incumbent GSIS Corporate Auditor Reynaldo P. Ventura
(Ventura).[2]
P a g e 12 | 20
The facts are as follows:
On May 30, 1997, Republic Act No. 8291, otherwise known as
The Government Service Insurance System Act of 1997 (the
GSIS Act) was enacted and approved, amending Presidential
Decree No. 1146, as amended, expanding and increasing the
coverage and benefits of the GSIS, and instituting reforms
therein.
On October 17, 2000, pursuant to the powers granted to it under
Section 41(n) of the said law, the GSIS Board of Trustees, upon
the recommendation of the Management-Employee Relations
Committee (MERCOM), approved Board Resolution No. 326
wherein they adopted the GSIS Employees Loyalty Incentive
Plan (ELIP),[3] to wit:
GSIS EMPLOYEES LOYALTY INCENTIVE PLAN
(Pursuant to Sec. 41(n) of R.A. No. 8291)
I OBJECTIVE : To motivate and reward employees for
meritorious, faithful and satisfactory service
II COVERAGE : The GSIS Employees Loyalty Incentive Plan
shall cover all present permanent employees and members of the
Board and those who may hereafter be appointed.
III SPECIFIC BENEFIT : LI = TGS* MULTIPLIED BY HS
MINUS 5yLS/BPRCP
Where : LI = loyalty incentive
TGS = total government service
HS = highest monthly salary/benefit received
5yLS = 5 year lump sum under RA 660, RA 910, PD 1146 or
RA 8291
BPRCP = retirement benefit previously received plus cash
payment for employees no longer qualified to 5yLS
*Determined as follows:
**For positions salary grade 1-26 For positions SG 27 up
1 - 20 yrs x 1.5 1 - 20 yrs x 1.25
21 - 30 yrs x 2.0 21 - 30 yrs x 1.75
31 yrs above x 2.5 31 yrs above x 2.00
02 OCTOBER 2017
**Subject to review. Applicable only to present salary structure.
IV IMPLEMENTING POLICIES:
1. To be entitled to the plan, the employee must be qualified
to retire with 5 year lump sum under RA 660 or RA 8291 or had
previously retired under applicable retirement laws
2. The loyalty incentive benefit shall be computed based on
both total government service and highest monthly
salary/benefit received from GSIS
3. Employees with pending administrative and/or criminal
case may apply but processing and payment of loyalty incentive
shall be held in abeyance until final decision on their cases
4. GSIS loyalty incentive plan can only be availed once and
employees who retired under GERSIP97 are no longer qualified
5. There shall be no refund of retirement premiums in all
cases
6. Application is subject to approval by the President and
General Manager
PROCEDURE:
1. Employees availing of the Employee Loyalty Incentive
Plan must file his/her application under RA 660[4] or RA 8291
for the five (5) year lump sum, with HRS for indorsement to
SIG
2. Option 2 under RA 8291 may be allowed but the loyalty
incentive shall be computed based on 5 year lump sum
3. The loyalty incentive shall only be paid after deducting the
lump sum under RA 660, RA 910,[5] PD 1146[6] or RA 8291
or retirement benefit previously received plus cash payment
4. Government service of previously retired employees shall
be considered in computing the loyalty incentive
5. For expediency, the processing of the plan shall be done
by the Social Insurance Group
LAW ON PUBLIC CORPORATION
EFFECTIVITY DATE: The Plan shall take effect August, 2000.
(Emphases supplied.)
On November 21, 2000, Board Resolution No. 326 was
amended by Board Resolution No. 360,[7] which provided for a
single rate for all positions, regardless of salary grade, in the
computation of creditable service, viz:
1-20 years x 1.5
21-30 years x 2.0
31 years above x 2.5
Except as herein amended, Resolution No. 326 dated October
17, 2000 shall remain to have full force and effect.
Dimagiba, the corporate auditor of GSIS, communicated to the
President and General Manager of GSIS that the GSIS RFP was
contrary to law. However, the GSIS Legal Services Group
opined that the GSIS Board was legally authorized to adopt the
plan since Section 28(b) of Commonwealth Act No. 186 as
amended by Republic Act No. 4968 has been repealed by
Sections 3 and 41(n) of Republic Act No. 8291.[8]
On January 16, 2001, Board Resolution No. 6[9] was approved,
wherein ELIP was renamed GSIS Retirement/Financial Plan
(RFP) to conform strictly to the wordings of Section 41(n) of
Republic Act No. 8291.
Upon Garcias assumption of office as President and General
Manager, Dimagiba requested to again review the GSIS RFP.
This was denied by Garcia.[10] Believing that the GSIS RFP
was morally indefensible,[11] Dimagiba sought the assistance of
COA in determining the legality and/or morality of the said Plan
in so far as it has adopted the best features of the two retirement
schemes, the 5-year lump sum payment under [Republic Act
No.] 1616 and the monthly pension of [Republic Act No.] 660
based on the creditable service computed at 150%.[12]
On August 7, 2001, COAs General Counsel Santos M.
Alquizalas (Alquizalas) issued a Memorandum to COA
Commissioner Raul C. Flores regarding the GSIS RFP.
Alquizalas opined that the GSIS RFP is a supplementary
P a g e 13 | 20
retirement plan, which is prohibited under Republic Act No.
4968, or the Teves Retirement Law. He also said that since there
is no provision in the new Republic Act No. 8291 expressly
repealing the Teves Retirement Law, the two laws must be
harmonized absent an irreconcilable inconsistency. Alquizalas
pronounced that Board Resolution Nos. 360 and 6 are null and
void for being violative of Section 28(b) of Commonwealth Act
No. 186 as amended by Republic Act No. 4968, which bars the
creation of a supplemental retirement scheme; and Section 41(n)
of Republic Act No. 8291, which speaks of an early retirement
plan or financial assistance.[13]
On August 14, 2001,[14] Commissioner Flores forwarded this
Memorandum to Dimagiba, who in turn forwarded it to Garcia
on August 23, 2001. Dimagiba, in her letter attached to
Alquizalass Memorandum, added that for lack of legal basis, her
office was disallowing in audit the portion of retirement benefits
granted under the GSIS RFP, or the excess of the benefits due
the retirees. She also said that GSIS could avail of the appeal
process provided for under Sections 48 to 50 of Presidential
Decree No. 1445 and Section 37.1 of the Manual on Certificate
of Settlement and Balances.[15]
On August 27, 2001, Garcia responded[16]to Dimagiba, taking
exception to the notice of disallowance for being highly
irregular and precipitate as it was based on a mere opinion of
COAs counsel who had no authority to declare the resolution of
the GSIS Board of Trustees as null and void. Moreover, Garcia
asseverated that COA had neither power nor authority to declare
as null and void certain resolutions approved by the Board of
Government Corporations, as the power to do so was
exclusively lodged before the courts. He also argued that the
notice of disallowance was premature, and was tantamount to a
pre-audit activity, as it should refer only to a particular or
specific disbursement of public funds and not against a general
activity or transaction. Garcia averred that the GSIS RFP was
part and parcel of the compensation package that GSIS may
provide for its personnel, by virtue of the powers granted to its
Board of Trustees under Section 41(m) and (n) of Republic Act
No. 8291. Garcia said that the appeal process would commence
only upon GSISs receipt of the particulars of the disallowances.
[17] Finally, Garcia requested Dimagiba to withdraw the notices
of disallowance in the interest of industrial peace in the GSIS.
[18]
02 OCTOBER 2017
Without responding to Garcias August 27, 2001 Memorandum,
Dimagiba issued the following Notices of Disallowance on the
grounds that:
Pursuant to legal opinion of the General Counsel dated August
7, 2001, Board Resolution No. 360 dated Nov. 21, 2000 as
amended by No. 6 dated Jan. 16, 2001 approving the Employees
Loyalty Incentive Plan (ELIP) is null and void for being directly
in conflict with Section 28(b) of CA No. 186 as amended by RA
4968 which bars the creation of supplemental retirement scheme
and of Section 41 (n) of RA 8291 which speaks of an early
retirement plan or financial assistance.[19]
[xxx]
On January 30, 2002, GSIS, together with some of the
petitioners herein, gave notice[25] to the COA CAO I that it was
appealing the 21 Notices of Disallowance it had received from
Dimagiba on various dates. It amended[26] this Notice of
Appeal the following day, to include all GSIS officials and
employees held liable and accountable under the said
disallowances.[27]
In their Memorandum of Appeal,[28] the petitioners mainly
argued that GSIS had the power, under its charter, to adopt and
implement the GSIS RFP. They alleged that their plan was not
unique to GSIS as other government agencies also have their
own retirement or financial assistance plans. They claimed that
to then disallow their retirement plan would be tantamount to a
violation of their constitutional right to be equally protected by
our laws.[29] The petitioners also argued that Republic Act No.
8291 had modified or repealed all provisions of the Teves
Retirement Law that were inconsistent with it and that GSISs
officials could not be held liable or accountable for
implementing the GSIS RFP since this was done in the
performance of their duties.[30]
On May 27, 2002, the COA, through Escarda, in CAO I
Decision No. 2002-009,[31] affirmed the disallowances made
by Dimagiba. Escarda sustained the COA general counsels
opinion and said that while the GSIS may have the power to
adopt an early retirement or a financial assistance plan under its
charter, it cannot supplement a retirement plan already existing
under the law. Escarda said that the purpose of an early
retirement plan is generally to streamline the organization by
encouraging those who would not be qualified for compulsory
retirement to retire early under the plan. However, Escarda
LAW ON PUBLIC CORPORATION
claimed, the availees of the plan were employees whose
supposed monthly pensions under the GSIS RFP included
services they had already earned in other government agencies.
Thus, Escarda held that the GSIS RFP was in reality a
supplementary retirement plan for these GSIS employees.
Finally, Escarda disagreed with GSISs assertion that the Teves
Retirement Law had been modified or repealed as the repealing
clause in Republic Act No. 8291 is a general repealing clause,
which is frowned upon and is generally not effective to repeal a
specific law like the Teves Retirement Law.[32]
Undaunted, the petitioners filed before the COA a Petition for
Review[33] of CAO Is decision, raising the exact same issues it
raised in its Memorandum of Appeal dated February 14, 2002,
to wit:
I
Whether or not petitioners/appellants GSIS and GSIS Board of
Trustees have the power and authority to design and adopt the
questioned GSIS Retirement Financial Plan.
II
Whether or not petitioners/appellant GSIS officials who are
merely implementing the GSIS Act of 1997 and duly adopted
Board Resolutions must be held responsible and accountable for
the implementation of the GSIS Retirement Financial Plan.
III
Whether or not the adoption of the GSIS Retirement Financial
Plan violated Section 28 (b) of CA No. 186 as amended by
Republic Act No. 4968, and Section 41(n) of Republic Act No.
8291, otherwise known as the GSIS Act of 1997.
IV
Whether or not the COA disallowance of the GSIS Retirement
Financial Plan is lawful, and the CAO I Decision No. 2002-009
and the Notices of Disallowance issued by GSIS Corporate
Auditor Dimagiba are proper.[34]
On March 18, 2003, COA issued Decision No. 2003-062,[35]
wherein the issue was narrowed down to whether or not the
GSIS Board can reward themselves with unusually large
P a g e 14 | 20
benefits in the face of an unusually large actuarial deficit which
will result in the denial of benefits of future retirees in other
government agencies for whom the fund is principally intended.
[36]
COA zeroed in on the fact that to be entitled to the GSIS RFP,
the employee must be qualified to retire with 5-year lump sum
under R.A. No. 660 or R.A. No. 8291 or [must have] previously
retired under the applicable retirement laws.[37] They affirmed
Escardas ruling and contended that what the still valid[38]
Teves Retirement Law permits is the creation of an early
retirement or financial assistance plan, and the above
requirement imposed under the GSIS RFP does not apply to
either plans. COA added:
Unmistakably, the Plan being a supplementary
pension/retirement plan, it contravenes the Teves law. Not even
the renaming of [the] Employees Loyalty Incentive Plan (ELIP)
to Retirement Financial Plan (RFP), purportedly to conform
with the wording of the law, could conceal its true nature or
character as a supplementary pension/retirement plan which
incorporates the best features of R.A. Nos. 660 and 8291,
creating in effect a third retirement plan for GSIS personnel
only. This is all the more made manifest by the fact that even
Board members who are not qualified at all to retire under any
existing retirement laws could retire under the RFP. Strikingly,
by promulgating another regular retirement scheme, the GSIS
Board enlarged the field of its authority and regulation as
provided in the statute it is supposed to administer.[39]
COA said that the power of GSIS in applying the law must not
be abused. COA averred that GSIS was found to be deficient
actuarially by Fifteen Billion Pesos, and for it to reward its
employees, who were already enjoying salaries higher than their
counterparts in other government agencies, meant that it would
have to dip into its principal fund to the prejudice of its
members, who were the very raison detre for its establishment.
[40]
Addressing petitioners claim of discrimination, COA said that
each of the government agencies that had adopted its own
retirement plans did so pursuant to a valid law and under factual
circumstances that were not present in the case of GSIS. COA
also affirmed the liability of the petitioners who were held
accountable under the disallowances as they had failed to
exercise the diligence of a good father of a family in the
performance of their functions.[41] Finally, COA averred that
02 OCTOBER 2017
while its general counsels opinion boosted its position, such was
not the basis of the disallowance.[42]
The petitioners sought reconsideration[43] of this decision and
even asked to be heard in oral arguments,[44] but COA, in its
Decision No. 2004-004 dated January 27, 2004,[45] denied both
motions and affirmed its Decision No. 2003-062 dated March
18, 2003 with finality.
The petitioners are now before us, asking us to nullify COAs
March 18, 2003 and January 27, 2004 decisions, on the ground
that they were made with grave abuse of discretion amounting to
lack or excess of jurisdiction.[46]
The petitioners posit the following arguments to support their
cause:
RESPONDENTS ACTED WITHOUT OR IN EXCESS OF
JURISDICTION, OR WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION, WHEN IN THE FOLLOWING MANNER:
I Below are the pertinent provisions of the foregoing laws:
Respondents sought to interpret clear provisions of Republic
Act No. 8291, otherwise known as the GSIS Act of 1997, and
declare null and void duly adopted resolutions of petitioner
GSIS which has the power and authority to design and adopt the
questioned GSIS Retirement Financial Plan (RFP).
II
Respondents ruled that petitioners GSIS officials who are
merely implementing the GSIS Act of 1997 and duly adopted
Board Resolutions could be held responsible and accountable
for the implementation of the GSIS Retirement Financial Plan
(RFP).
III
Respondents held that the adoption of the GSIS Retirement
Financial Plan (RFP) violated Section 28 (b) of CA No. 186, as
amended by Republic Act No. 4968, and Section 41(n) of
LAW ON PUBLIC CORPORATION
Republic Act No. 8291, otherwise known as the GSIS Act of
1997.
IV
Respondent[s] disallowed the GSIS Retirement Financial Plan
(RFP), and erroneously affirmed the Notices of Disallowance
issued by then GSIS Corporate Auditor Dimagiba.
V
Respondents touched on new and irrelevant matters which were
not raised in the disallowances and/or pleadings below, and
which were never validated.[47]
The crux of the present case boils down to the legality of Board
Resolution Nos. 360, 326, and 6, which we shall refer to simply
as the GSIS RFP, in light of Republic Act No. 8291 or the GSIS
Act of 1997, and Commonwealth Act No. 186 or the
Government Service Insurance Act as amended by Republic Act
No. 4968 (the Teves Retirement Law).
Republic Act No. 8291
SECTION 41. Powers and Functions of the GSIS. The GSIS
shall exercise the following powers and functions:
xxxx
(n) to design and adopt an Early Retirement Incentive Plan
(ERIP) and/or financial assistance for the purpose of retirement
for its own personnel; x x x.
Commonwealth Act No. 186 as amended by the Teves
Retirement Law:
SEC. 28. Miscellaneous Provisions x x x
(b) Hereafter no insurance or retirement plan for officers or
employees shall be created by any employer. All supplementary
P a g e 15 | 20
retirement or pension plans heretofore in force in any
government office, agency, or instrumentality or corporation
owned or controlled by the government, are hereby declared
inoperative or abolished. x x x. [48]
Republic Act No. 4968 or the
Teves Retirement Law
Is Still Good Law
The petitioners insist that under Section 3 of Republic Act No.
8291, which provides that all laws or any law or parts of law
specifically inconsistent herewith are hereby repealed or
modified accordingly, all provisions of the Teves Retirement
Law that are inconsistent with Republic Act No. 8291 are
deemed repealed or modified.[49]
We do not subscribe to petitioners interpretation of this law.
This is because, unless the intention to revoke is clear and
manifest, the abrogation or repeal of a law cannot be assumed.
[50] The repealing clause contained in Republic Act No. 8291 is
not an express repealing clause because it fails to identify or
designate the statutes that are intended to be repealed. It is
actually a clause, which predicated the intended repeal upon the
condition that a substantial conflict must be found in existing
and prior laws.[51]
Since Republic Act No. 8291 made no express repeal or
abrogation of the provisions of Commonwealth Act No. 186 as
amended by the Teves Retirement Law, the reliance of the
petitioners on its general repealing clause is erroneous. The
failure to add a specific repealing clause in Republic Act No.
8291 indicates that the intent was not to repeal any existing law,
unless an irreconcilable inconsistency and repugnancy exists in
the terms of the new and old laws.[52]
We are likewise not convinced by petitioners claim of repeal by
implication. It is a well-settled rule that to bring about an
implied repeal, the two laws must be absolutely incompatible
and clearly repugnant that the later law cannot exist without
nullifying the prior law.[53] As this Court held in Recaa, Jr. v.
Court of Appeals[54]:
Repeal of laws should be made clear and expressed. Repeals by
implication are not favored as laws are presumed to be passed
with deliberation and full knowledge of all laws existing on the
02 OCTOBER 2017
subject. Such repeals are not favored for a law cannot be
deemed repealed unless it is clearly manifest that the legislature
so intended it. x x x.[55]
This Court sees no incompatibility between the two laws being
discussed here. In reconciling Section 41(n) of Republic Act No.
8291 with the Teves Retirement Law, we are guided by this
Courts pronouncement in Philippine International Trading
Corporation v. Commission on Audit[56]:
In reconciling Section 6 of Executive Order No. 756 with
Section 28, Subsection (b) of Commonwealth Act No. 186, as
amended, uppermost in the mind of the Court is the fact that the
best method of interpretation is that which makes laws
consistent with other laws which are to be harmonized rather
than having one considered repealed in favor of the other. Time
and again, it has been held that every statute must be so
interpreted and brought in accord with other laws as to form a
uniform system of jurisprudence interpretere et concordare
legibus est optimus interpretendi. Thus, if diverse statutes relate
to the same thing, they ought to be taken into consideration in
construing any one of them, as it is an established rule of law
that all acts in pari materia are to be taken together, as if they
were one law. x x x.[57]
While Republic Act No. 8291 speaks of an early retirement
incentive plan or financial assistance for the GSIS employees,
Commonwealth Act No. 186 as amended by the Teves
Retirement Law talks about insurance or retirement plans other
than our existing retirement laws. In other words, what the
Teves Retirement Law contemplates and prohibits are separate
retirement or insurance plans. In fact, the very same provision
declared inoperative or abolished all supplementary retirement
or pension plans.
The GSIS Retirement/Financial
Plan is Null and Void
It is true that under Section 41(n) of Republic Act No. 8291,
GSIS is expressly granted the power to adopt a retirement plan
and/or financial assistance for its employees, but a closer look at
the provision readily shows that this power is not absolute. It is
qualified by the words early, incentive, and for the purpose of
retirement. The retirement plan must be an early retirement
LAW ON PUBLIC CORPORATION
incentive plan and such early retirement incentive plan or
financial assistance must be for the purpose of retirement.
According to Websters Third New International Dictionary,
early means occurring before the expected or usual time, while
incentive means serving to encourage, rouse, or move to action,
or something that constitutes a motive or spur.[58]
It is clear from the foregoing that Section 41(n) of Republic Act
No. 8291 contemplates a situation wherein GSIS, due to a
reorganization, a streamlining of its organization, or some other
circumstance, which calls for the termination of some of its
employees, must design a plan to encourage, induce, or motivate
these employees, who are not yet qualified for either optional or
compulsory retirement under our laws, to instead voluntarily
retire. This is the very reason why under the law, the retirement
plan to be adopted is in reality an incentive scheme to encourage
the employees to retire before their retirement age.
The above interpretation applies equally to the phrase financial
assistance, which, contrary to the petitioners assertion, should
not be read independently of the purpose of an early retirement
incentive plan. Under the doctrine of noscitur a sociis, the
construction of a particular word or phrase, which is in itself
ambiguous, or is equally susceptible of various meanings, may
be made clear and specific by considering the company of words
in which it is found or with which it is associated. In other
words, the obscurity or doubt of the word or phrase may be
reviewed by reference to associated words.[59] Thus, the phrase
financial assistance, in light of the preceding words with which
it is associated, should also be construed as an incentive scheme
to induce employees to retire early or as an assistance plan to be
given to employees retiring earlier than their retirement age.
Such is not the case with the GSIS RFP. Its very objective, [t]o
motivate and reward employees for meritorious, faithful, and
satisfactory service,[60] contradicts the nature of an early
retirement incentive plan, or a financial assistance plan, which
involves a substantial amount that is given to motivate
employees to retire early. Instead, it falls exactly within the
purpose of a retirement benefit, which is a form of reward for an
employees loyalty and lengthy service,[61] in order to help him
or her enjoy the remaining years of his life.
Furthermore, to be able to apply for the GSIS RFP, one must be
qualified to retire under Republic Act No. 660 or Republic Act
No. 8291, or must have previously retired under our existing
P a g e 16 | 20
retirement laws. This only means that the employees covered by
the GSIS RFP were those who were already eligible to retire or
had already retired. Certainly, this is not included in the scope of
an early retirement incentive plan or financial assistance for the
purpose of retirement.
The fact that GSIS changed the name from Employees Loyalty
Incentive Plan to Retirement/Financial Plan does not change its
essential nature. A perusal of the plan shows that its purpose is
not to encourage GSISs employees to retire before their
retirement age, but to augment the retirement benefits they
would receive under our present laws. [62] Without a doubt, the
GSIS RFP is a supplementary retirement plan, which is
prohibited by the Teves Retirement Law.
Conte v. Commission on Audit[63] squarely applies in this case.
In that case, the Social Security System (SSS) issued Resolution
No. 56, which provided financial incentive and inducement to
SSS employees who were qualified to retire, to avail of
retirement benefits under Republic Act No. 660, as amended
(which GSIS would have to pay), rather than the retirement
benefits under Republic Act No. 1616, as amended (which SSS
would have to pay). Under SSS Resolution No. 56, those who
retire under Republic Act No. 660 would be given a financial
assistance equivalent in amount to the difference between what
a retiree would have received under Republic Act No. 1616, less
what he was entitled to under Republic Act No. 660. COA
disallowed in audit all claims for financial assistance under SSS
Resolution No. 56 for being similar to those separate retirement
plans or incentive/separation pay plans adopted by other
government corporate agencies, which resulted in the increase
of benefits beyond what was allowed under existing retirement
laws. This Court sustained COAs disallowance and held that
SSS Resolution No. 56 constituted a supplementary retirement
plan proscribed by Section 28(b) of Commonwealth Act No.
186, as amended by Republic Act No. 4968. [64]
The petitioners argue that Conte finds no application in this
case, since SSS had no authority under its charter to adopt such
a resolution, unlike the GSIS, which was cloaked with authority
to issue the questioned resolutions. Furthermore, petitioners
argue that Republic Act No. 8291 became effective in 1997,
which was after this Court had already decided the Conte case.
We find no merit in the petitioners arguments. The laws have
not changed, and the doctrine in Conte has not been overturned
or abandoned. The fact that Republic Act No. 8291 was
02 OCTOBER 2017
approved and enacted after Conte is of no moment, as what was
interpreted in Conte was the provision in the Teves Retirement
Law in issue here. Moreover, we have already discussed above
how such provision has neither been repealed nor modified by
Section 41(n) of Republic Act No. 8291. Thus, it is just fitting
that we find guidance in the application and interpretation of
Section 28(b) of Commonwealth Act No. 186, as amended by
Republic Act No. 4968, from the Conte case.
As we have held in that case:
Section 28(b) [of C.A. No. 186] as amended by R.A. No. 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.[65]
The petitioners asseverate that many laws such as Republic Act
Nos. 8291, 1161, 8282, 6683, and 7641, were validly enacted
after the Teves Retirement Law; thus, the evil that it seeks to
avoid is the proliferation of those retirement plans that are not so
authorized by law.[66] The petitioners even go so far as
comparing themselves to other government agencies, which
have adopted their own retirement schemes at one time or
another such as the Development Bank of the Philippines, the
Securities and Exchange Commission, the National Power
Corporation, the COA, the Court of Appeals, and even this
Court.[67]
The petitioners themselves admit that those retirement schemes
were adopted as a [one-time] grant [by] reason of
reorganization[68] pursuant to Republic Act No. 6683[69] or the
Early Retirement Law. As for the additional benefits extended to
retiring justices or commissioners, suffice it to say that they
were also given pursuant to laws passed by Congress. Moreover,
those retirement plans enjoy the presumption of validity and
regularity.
In stark contrast, the GSIS RFP was not created because of a
valid company reorganization. Its purpose did not include the
granting of benefits for early retirement. Neither did it provide
benefits for either voluntary or involuntary separation from
GSIS. It was intended for employees who were already eligible
to retire under existing retirement laws. While the GSIS may
LAW ON PUBLIC CORPORATION
have been clothed with authority to adopt an early retirement or
financial assistance plan, such authority was limited by the very
law it was seeking to implement.
Borrowing this Courts words in the Conte case, it is beyond
cavil that [the GSIS Retirement/Financial Plan] contravenes
[Section 28(b) of C.A. No. 186 as amended by R.A. No. 4968 or
the Teves Retirement Law], and is therefore invalid, void, and
of no effect. 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.[70]
Another compelling reason to nullify the GSIS RFP is that it
allows, and in fact mandates, the inclusion of the years in
government service of previously retired employees, to wit:
PROCEDURE:
xxxx
4. Government service of previously retired employees shall be
considered in computing the loyalty incentive.[71]
In Santos v. Court of Appeals,[72] we affirmed the Court of
Appeals and the Civil Service Commissions ruling that for the
purpose of computing or determining Santos separation pay, his
years of service in his previous government office should be
excluded and his separation pay should be solely confined to his
services in his new government position. We gave the rationale
for this as follows:
Such would run counter to the policy of this Court against
double compensation for exactly the same services. More
important, it would be in violation of the first paragraph of
Section 8 of Article IX-B of the Constitution, which proscribes
additional, double, or indirect compensation. Said provision
reads:
No elective or appointive public officer or employee shall
receive additional, double, or indirect compensation, unless
specifically authorized by law .[73]
P a g e 17 | 20
Our ruling therein is likewise applicable in this case. To credit
the years of service of GSIS retirees in their previous
government office into the computation of their retirement
benefits under the GSIS RFP, notwithstanding the fact that they
had received or had been receiving the retirement benefits under
the applicable retirement law they retired in, would be to
countenance double compensation for exactly the same services.
[74]
To emphasize COAs distaste[75] for the huge retirement
benefits of GSISs board members, officers, and employees, who
are already receiving significantly higher salaries than their
counterparts in other government agencies, COA illustrated the
glaring discrepancy between what a GSIS employee would get
under the GSIS RFP, and what a mere GSIS member would get
under applicable retirement laws:
[xxx]
With the above illustration, it can be readily seen and
understood why the Teves Retirement Law prohibits the
proliferation of additional retirement plans in our government
offices. While it is true that a better compensation package will
not only attract more competent and capable individuals to work
in GSIS, but will also ensure that they remain loyal and faithful
therein, this has already been addressed by the GSIS employees
exemption from Republic Act No. 678 or the Salary
Standardization Law (SSL), under Sec. 43(d) of Republic Act
No. 8291. As shown in the above tables, the salary of a GSIS
employee is much higher compared to his counterpart in another
government agency. This remains to be true even with the recent
increase of the salaries in the SSL.
The petitioners also question COAs authority to nullify the
resolutions involved in this case. It must be remembered that
none of the COA decisions nullified the Board Resolutions
adopted by GSISs Board of Trustees. What the COA decisions
affirmed were the disallowances made by GSISs own Corporate
Auditor, Dimagiba. It is irrelevant that COA, in its decisions,
touched upon issues not brought before it, or that it referred to
its general counsels opinion on the GSIS RFP, as these were
done only to reinforce COAs position. They have no bearing
upon the weight of COAs decisions, which are based upon our
existing laws and jurisprudence.
02 OCTOBER 2017
As for Dimagiba, while she may have relied on the opinion of
COAs legal counsel to support the disallowances she had made,
it is worthy to note that she had already informed Garcia of the
GSIS RFPs illegality even before she sought COAs opinion on
the matter. Moreover, neither Dimagibas nor COAs confidence
in the opinion of COAs general counsel could be faulted, as
under Presidential Decree No. 1445, or the Government
Auditing Code of the Philippines, one of the responsibilities of
COAs legal office is to interpret pertinent laws and auditing
rules and regulations, to wit:
SECTION 11. The Legal Office. The Legal Office shall be
charged with the following responsibilities:
(1) Perform advisory and consultative functions and render
legal services with respect to the performance of the functions of
the Commission and the interpretation of pertinent laws and
auditing rules and regulations; x x x.
In view of the above, we can hardly impute grave abuse of
discretion amounting to lack or excess of jurisdiction on the part
of respondents COA, Escarda, and Dimagiba, for disallowing in
audit the portion of retirement benefits in excess of what is
allowed under our existing retirement laws. On the contrary,
they acted with caution, diligence, and vigilance in the exercise
of their duties, especially since what was involved were huge
amounts of money imbued with public interest, since GSISs
funds come from the contributions of its members. Thus, GSISs
business is to keep in trust the money belonging to its members,
[77] who are not limited to its own employees.
The Payees are Liable for the
Return of the Disallowed Benefits
Under the GSIS RFP
The petitioners claim that GSISs Board of Trustees cannot be
held liable as they were acting pursuant to a valid law when they
adopted the GSIS RFP. The petitioners also argue that the
implementation of the GSIS RFP was merely ministerial, thus
the GSIS officers held accountable under the Notices of
Disallowance should not be held responsible and accountable
for the allocation and release of the benefits under the GSIS
RFP.
LAW ON PUBLIC CORPORATION
This Court agrees that only the payees should be held liable for
the return of the disallowed amounts under the GSIS RFP.
Although it is true that as early as December 2000,[78]
Dimagiba already questioned the legality of the GSIS RFP, it
was only in August 2001 when GSIS received COAs opinion on
the matter. Moreover, COA first decided the issue only in 2002.
While the Board of Trustees believed they had the authority and
power to adopt the GSIS RFP, the officers on the other hand
believed that they were implementing a valid resolution. As we
said in Buscaino v. Commission on Audit,[79] the resolution of
the Board of Trustees was sufficient basis for the disbursement,
and it is beyond these officers competence to pass upon the
validity of such board resolutions.[80]
On account of the GSIS RFPs doubtful validity, the petitioners
should have exercised prudence and held in abeyance the
disbursement of the portion of retirement benefits under the
GSIS RFP until the issue of its legality had been resolved.
However, the Board of Trustees and the officers held
accountable under the Notices of Disallowance should not be
held liable as they are entitled to the presumption of having
exercised their functions with regularity and in good faith.
WHEREFORE, the petition is PARTIALLY GRANTED. The
assailed Decisions of the Commission on Audit Nos. 2003-062
and 2004-004 dated March 18, 2003 and January 27, 2004, are
AFFIRMED with the MODIFICATION that only the payees of
the disbursements made under the GSIS RFP in the Notices of
Disallowance are liable for such disbursements. Board
Resolution Nos. 326, 360, and 6 are declared ILLEGAL, VOID,
and OF NO EFFECT.
SO ORDERED.
G.R. No. 146824 November 21, 2007
ENCARNACION E. SANTIAGO, petitioner,
vs.
COMMISSION ON AUDIT and THE DIRECTOR OF THE
COMMISSION ON AUDIT, REGIONAL OFFICE NO. V,
respondents.
On September 13, 2007, petitioner filed a motion for
clarification of the dispositive portion of the Decision in this
P a g e 18 | 20
case which was promulgated on June 15, 2006. The dispositive
portion reads:
WHEREFORE, the petition is PARTLY GRANTED in that
respondent COA is authorized merely to withhold petitioner's
salary but not to apply it to the alleged shortage for which her
liability is still being litigated. No costs.
SO ORDERED.
Petitioner informed the Court that upon the directive of the
Bureau of Local Government Finance Executive Director Ma.
Presentacion R. Montesa, she is back to her regular station and
formally assumed office as the Municipal Treasurer of Goa,
Camarines Sur, on February 26, 2007.
In a letter dated August 13, 2007, petitioner requested
respondents and the Municipal Mayor of Goa, Camarines Sur, to
pay her representation allowance, additional compensation
allowance, productivity bonus, year-end bonus, clothing
allowance and other benefits, excluding her salary, from
October 1998 up to the present based on the dispositive portion
of the Decision.
In a letter dated August 22, 2007, respondent Commission on
Audit (COA), through the Regional Cluster Director, replied
that the items requested cannot be paid to petitioner because this
Court has already clarified the issue when it stated in the body
of the Decision that ". . . COA can direct the proper officer to
withhold petitioner's salary and other emoluments. . . ."
According to COA, "emoluments" necessarily include all
allowances and any money due petitioner.
Petitioner prays that the dispositive portion of the Decision be
clarified as to whether the emoluments due her as Municipal
Treasurer are excluded from the item that respondents can
withhold, so that in the event that the said emoluments are
excluded, the same can be paid to her.
The Philippine Law Dictionary, third edition, by Federico B.
Moreno, defines "emolument" as:
Fees, fixed salary, and compensation which the incumbent of an
office is by law entitled to receive because he holds such office
or performed some service required of the occupant thereof.
02 OCTOBER 2017
The term "emolument" includes salary, fees, compensation,
perquisites, pensions and retirement benefits. — Philippine
Constitutional Association Inc. v. Gimenez, 122 Phil. 904.
In petitioner's special civil action for certiorari, she prayed that
judgment be issued setting aside the Director's First Indorsement
dated January 25, 2000, the Commission's Letters dated
December 8, 2000 and January 22, 2001, the Second
Indorsement dated December 8, 2000; and that the respondents,
including the Municipal Mayor of Goa, Camarines Sur, be
ordered to immediately pay her salary in the accumulated
amount of P124,606.21, and the salary accruing after the month
of July 1999 to which she may be entitled.1
The Court took cognizance of the petition insofar as it raised
this question of law:
Can the salary of a government employee be ordered withheld,
retained and applied to the payment of public funds [in the
amount of P3,580,378.80] allegedly embezzled under the
employee's care on the basis of an audit report and the filing of
an administrative case and a criminal case for malversation of
public funds?
Stated otherwise, may State Auditor del Rosario direct that the
salary and other emoluments of petitioner be withheld and
applied to her cash shortage determined merely in an audit
examination?2
The Court held:
Regarding the propriety of withholding the petitioner's salary,
the Court holds that COA can direct the proper officer to
withhold petitioner's salary and other emoluments under Section
21, Chapter 4, Subtitle B, Book V of the Administrative Code of
1987, which is substantially the same as Section 37 of PD No.
1445, the legal basis of COA. . . .
xxx
It is noted that the directive of State Auditor Del Rosario to the
Municipal Mayor of Goa, Camarines Sur to withhold the salary
of petitioner is in accordance with the COA Guidelines to the
Examiner/Auditor in case of a cash shortage contained in
Chapter 3 of the COA Handbook on Cash Examination . . . .
xxx
LAW ON PUBLIC CORPORATION
The State Auditors' finding of cash shortage against petitioner
municipal treasurer, which has not been satisfactorily disputed,
is prima facie evidence against her. The prima facie evidence
suffices for the withholding of petitioner's salary, in order to
safeguard the interest of the Government.
However, it must be stated that although State Auditor del
Rosario properly directed the Municipal Mayor of Goa,
Camarines Sur to withhold petitioner's salary and other
emoluments, she incorrectly directed that the same be applied or
set off against petitioner's cash shortage. As ruled in Villanueva,
before set-off can take place under Section 624 of the Revised
Administrative Code of 1919, as amended, now Section 21 of
the Administrative Code of 1987, a person's indebtedness to the
government must be one that is admitted by him or pronounced
by final judgment of a competent court. In this case, the
indebtedness was not admitted by petitioner and a competent
court has not yet pronounced final judgment thereon.
As a result, the amount of petitioner's salary remitted to the local
government treasurer as payment of petitioner's cash shortage
should be considered merely withheld until final resolution on
her indebtedness. In the event that petitioner is found not liable
for the cash shortage, the withheld salary and other emoluments
will be released to her; otherwise, it will be applied in payment
of her indebtedness.
WHEREFORE, the petition is PARTLY GRANTED in that
respondent COA is authorized merely to withhold petitioner's
salary but not to apply it to the alleged shortage for which her
liability is still being litigated. No costs.
SO ORDERED.3
The issue, as stated in the Decision, clearly shows that the Court
considered for resolution whether or not the salary and other
emoluments of petitioner may be withheld by respondents and
applied to her cash shortage determined merely in an audit
examination.
In the body of the Decision, the Court held that "[r]egarding the
propriety of withholding the petitioner's salary, the Court holds
that COA can direct the proper officer to withhold petitioner's
salary and other emoluments under Section 21, Chapter 4,
Subtitle B, Book V of the Administrative Code of 1987, which
is substantially the same as Section 37 of PD No. 1445, the legal
basis of COA. . . ."4
P a g e 19 | 20
Immediately before the dispositive portion of the Decision, the
Court stated:

As a result, the amount of petitioner's salary remitted to the local

government treasurer as payment of petitioner's cash shortage
should be considered merely withheld until final resolution on
her indebtedness. In the event that petitioner is found not liable
for the cash shortage, the withheld salary and other emoluments
will be released to her; otherwise, it will be applied in payment
of her indebtedness.

Hence, it is clear that respondent COA can withhold the salary

and other emoluments due petitioner up to the amount of her
alleged shortage.

WHEREFORE, it is hereby clarified that respondent COA is

authorized to withhold petitioner's salary and other emoluments
up to the amount of her alleged shortage, but not to apply the
withheld amount to the alleged shortage for which her liability
is still being litigated.

SO ORDERED.

02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 20 | 20