Today is Sunday, May 12, 2019

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

PCION, JR., WINSTON F. GARCIA, REYNALDO P. PALMIERY, LEOVIGILDO P. ARRELLANO, ELMER T. BAU
LOURDES PATAG, RICHARD M. MARTINEZ, ASUNCION C. SINDAC, GLORIA D. CAEDO, ROMEO C. QUILAT
LA, Petitioners,

MAGIBA, and REYNALDO P. VENTURA, Respondents.

DECISION

f Court to annul and set aside the Commission on Audit’s Decision Nos. 2003-062 and 2004-004 dated March 18, 2003 and Jan

s, namely: Chairman Hermogenes D. Concepcion, Jr.; Vice-Chairman and President and General Manager Winston F. Garcia (G
O. Ibañez, and Aida C. Nocete; Senior Vice Presidents Aurora Mathay, Enriqueta Disuangco, Amalio Mallari, Lourdes Patag, an
no Bulaong, Shirley D. Florentino, and Lea M. Mendiola, together with all other officials and employees held liable by the Com

morsonia B. Escarda (Escarda), who rendered CAO I Decision No. 2002-009 dated May 27, 2002; the former Corporate Auditor
(Ventura).2

nce System Act of 1997" (the GSIS Act) was enacted and approved, amending Presidential Decree No. 1146, as amended, expan

e GSIS Board of Trustees, upon the recommendation of the Management-Employee Relations Committee (MERCOM), approve

GSIS EMPLOYEES LOYALTY INCENTIVE PLAN

(Pursuant to Sec. 41(n) of R.A. No. 8291)

ice

employees and members of the Board and those who may hereafter be appointed.
ployees no longer qualified to 5yLS

5 year lump sum under RA 660 or RA 8291 or had previously retired under applicable retirement laws

ernment service and highest monthly salary/benefit received from GSIS

but processing and payment of loyalty incentive shall be held in abeyance until final decision on their cases

o retired under GERSIP’97 are no longer qualified

s/her application under RA 6604 or RA 8291 for the five (5) year lump sum, with HRS for indorsement to SIG

be computed based on 5 year lump sum

nder RA 660, RA 910,5 PD 11466 or RA 8291 or retirement benefit previously received plus cash payment

in computing the loyalty incentive

nsurance Group

which provided for a single rate for all positions, regardless of salary grade, in the computation of creditable service, viz:
 orce and effect.

f GSIS that the GSIS RFP was contrary to law. However, the GSIS Legal Services Group opined that the GSIS Board was legall

Retirement/Financial Plan (RFP) to conform strictly to the wordings of Section 41(n) of Republic Act No. 8291.

gain review the GSIS RFP. This was denied by Garcia.10 Believing that the GSIS RFP was "morally indefensible,"11 Dimagiba so
r [Republic Act No.] 1616 and the monthly pension of [Republic Act No.] 660 based on the creditable service computed at 150%

ndum to COA Commissioner Raul C. Flores regarding the GSIS RFP. Alquizalas opined that the GSIS RFP is a supplementary
e Teves Retirement Law, the two laws must be harmonized absent an irreconcilable inconsistency. Alquizalas pronounced that B
supplemental retirement scheme; and Section 41(n) of Republic Act No. 8291, which speaks of an early retirement plan or finan

urn forwarded it to Garcia on August 23, 2001. Dimagiba, in her letter attached to Alquizalas’s Memorandum, added that for lac
e appeal process provided for under Sections 48 to 50 of Presidential Decree No. 1445 and Section 37.1 of the Manual on Certif

nce for being "highly irregular and precipitate" as it was based on a mere opinion of COA’s counsel who had no authority to dec
the Board of Government Corporations, as the power to do so was exclusively lodged before the courts. He also argued that the
action. Garcia averred that the GSIS RFP was part and parcel of the compensation package that GSIS may provide for its personn
the particulars of the disallowances.17 Finally, Garcia requested Dimagiba to withdraw the notices of disallowance "in the interes

Notices of Disallowance on the grounds that:

0 dated Nov. 21, 2000 as amended by No. 6 dated Jan. 16, 2001 approving the Employees Loyalty Incentive Plan (ELIP) is null
aks of an early retirement plan or financial assistance.19

Notices of Disallowance dated September 19, 200120

Persons Liable:
Notice of
Board of Trustees;
Disallowance Amount
Payee Lourdes Patag (SVP),
No./Period Disallowed
Gloria Caedo (VP-SIAMS II),
covered:
the payee, and
the following officers:
2001-01-412/ Marina Santamaria ₱ 6,895,545.84 Richard Martinez
December Lea M. Mendiola
2000
2001-02-412/ Rosita N. Lim ₱ 2,281,005.52
December
2000
2001-03-412/ Manuel G. Ojeda ₱ 1,201,581.29 Daniel Mijares
January 2001 Romeo Quilatan
Richard Martinez
Benigno Bulaong
2001-04-412/ Federico Pascual ₱ Winston F. Garcia
March 2001 11,444,957.32 Esperanza Fallorina
Lea M. Mendiola
2001-05-412/ Juanito Gamier, Sr. ₱ 332,035.79 Winston F. Garcia
March 2001 Esperanza Fallorina
Lea M. Mendiola
Shirley Florentino
2001-06-412/ Vicente Villegas ₱ 4,792,260.17 Enriqueta Disuanco
May 2001 Aurora P. Mathay
Lea M. Mendiola

Notices of Disallowance dated October 22, 200121

Persons Liable:
Board of Trustees;
Gloria Caedo (VP-SIAMS II);
Notice of
Asuncion Sindac (VP);
Disallowance
Amount Richard M. Martinez (VP &
No./Period Payee
Disallowed Controller);
covered:
Lea M. Mendiola (Manager,
July 24, 2001
HRSD);
the payee; and
the following officers:
2001-07-412 Rustico G. Delos ₱ Reynaldo Palmiery
Angeles 1,968,516.01
2001-08-412 Lourdes Delos ₱ Reynaldo Palmiery
Angeles 4,320,567.99 Amalio A. Mallari
2001-09-412 Gloria L. Anonuevo ₱ Lolita B. Bacani
1,308,705.75
2001-10-412 Elvira J. Agcaoili ₱ Reynaldo Palmiery
2,313,729.41 Amalio A. Mallari
2001-11-412 Segundina S. ₱ 743,877.21 (except Richard Martinez and Lea
Dionisio M. Mendiola)

Notices of Disallowance dated October 23, 200122

Persons Liable:
Board of Trustees;
Notice of
Gloria Caedo (VP-SIAMS II);
Disallowance
Amount Asuncion Sindac (VP);
No./Period Payee
Disallowed Lea M. Mendiola (Manager,
covered:
HRSD);
July 24, 2001
the payee; and
the following officers:
2001-12-412 Daniel N. Mijares ₱ Reynaldo Palmiery
7,148,031.17 Richard Martinez
 2001-13-412 Melinda A. Flores ₱ Reynaldo Palmiery
1,459,974.12 Richard Martinez
Manuel P. Bausa
2001-14-412 Democrito M. ₱ 532,869.65 Enriqueta Disuanco
Silang Arnulfo Madriaga
2001-15-412 Manuel P. Bausa ₱ Reynaldo Palmiery
1,955,561.67 Richard Martinez
Lourdes A. Delos Angeles

Notices of Disallowance dated November 9, 200123

Persons Liable:
Board of Trustees;
Notice of
Winston F. Garcia (PGM);
Disallowance Amount
Payee Asuncion Sindac (SVP);
No./Period Disallowed
Gloria Caedo (VP);
covered:
the payee; and
the following officers:
2001-16-412/ Lourdes G. Patag ₱ Enriquita Disuanco
June 28, 2001 7,883,629.28 Lea M. Mendiola
2001-17-412/ Elvira U. Geronimo ₱ Richard Martinez
July 17, 2001 5,648,739.26

Notices of Disallowance dated November 13, 200124

Persons Liable:
Board of Trustees;
Notice of Asuncion Sindac (SVP);
Disallowance Amount Gloria Caedo (VP);
Payee
No./Period Disallowed Lea M. Mendiola (Manager,
covered: HRSD)
the payee; and
the following officers:
2001-20-412/ Modesto A. De ₱ Daniel N. Mijares
August 28, Leon 2,887,056.75 Romeo Quilatan
2001
2001-21-412/ Antonio S. De ₱ 931,583.11 Reynaldo Palmiery
July 20, 2001 Castro Richard Martinez
2001-22-412/ Teresa O. Loyola ₱ 485,184.27 Leocadia S. Fajardo
August 27,
2001
2001-23-412/ Pablito B. Galvez ₱ 93,487.54 Reynaldo Palmiery
August 27, Shirley Florentino
2001

A CAO I that it was appealing the 21 Notices of Disallowance it had received from Dimagiba on various dates. It amended26 thi
 its charter, to adopt and implement the GSIS RFP. They alleged that their plan was not unique to GSIS as other government age
protected by our laws.29 The petitioners also argued that Republic Act No. 8291 had modified or repealed all provisions of the T
es.30

isallowances made by Dimagiba. Escarda sustained the COA general counsel’s opinion and said that while the GSIS may have t
early retirement plan is generally to streamline the organization by encouraging those who would not be qualified for compulsory
eady earned in other government agencies. Thus, Escarda held that the GSIS RFP was in reality a supplementary retirement plan
repealing clause, which is frowned upon and is generally not effective to repeal a specific law like the Teves Retirement Law.32

sing the exact same issues it raised in its Memorandum of Appeal dated February 14, 2002, to wit:

power and authority to design and adopt the questioned GSIS Retirement Financial Plan.

II

the GSIS Act of 1997 and duly adopted Board Resolutions must be held responsible and accountable for the implementation of

III

on 28 (b) of CA No. 186 as amended by Republic Act No. 4968, and Section 41(n) of Republic Act No. 8291, otherwise known

IV

wful, and the CAO I Decision No. 2002-009 and the Notices of Disallowance issued by GSIS Corporate Auditor Dimagiba are p

n to "whether or not the GSIS Board can reward themselves with unusually large benefits in the face of an unusually large actuar

o retire with 5-year lump sum under R.A. No. 660 or R.A. No. 8291 or [must have] previously retired under the applicable retire
above requirement imposed under the GSIS RFP does not apply to either plans. COA added:

law. Not even the renaming of [the] Employees Loyalty Incentive Plan (ELIP) to Retirement Financial Plan (RFP), purportedly
in effect a third retirement plan for GSIS personnel only. This is all the more made manifest by the fact that even Board membe
d of its authority and regulation as provided in the statute it is supposed to administer.39

S was found to be deficient actuarially by Fifteen Billion Pesos, and for it to reward its employees, who were already enjoying s
hment.40

that had adopted its own retirement plans did so pursuant to a valid law and under factual circumstances that were not present in
erformance of their functions.41 Finally, COA averred that while its general counsel’s opinion boosted its position, such was not

ments,44 but COA, in its Decision No. 2004-004 dated January 27, 2004,45 denied both motions and affirmed its Decision No. 200

004 decisions, on the ground that they were made with grave abuse of discretion amounting to lack or excess of jurisdiction.46

E ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION, WHEN IN THE FOLLOWING

wise known as the GSIS Act of 1997, and declare null and void duly adopted resolutions of petitioner GSIS which has the power
 II

e GSIS Act of 1997 and duly adopted Board Resolutions could be held responsible and accountable for the implementation of th

III

violated Section 28 (b) of CA No. 186, as amended by Republic Act No. 4968, and Section 41(n) of Republic Act No. 8291, othe

IV

usly affirmed the Notices of Disallowance issued by then GSIS Corporate Auditor Dimagiba.

isallowances and/or pleadings below, and which were never validated.47

which we shall refer to simply as "the GSIS RFP," in light of Republic Act No. 8291 or the GSIS Act of 1997, and Commonwe

ers and functions:

the purpose of retirement for its own personnel; x x x.

mployer. All supplementary retirement or pension plans heretofore in force in any government office, agency, or instrumentality

s or any law or parts of law specifically inconsistent herewith are hereby repealed or modified accordingly," all provisions of the

n to revoke is clear and manifest, the abrogation or repeal of a law cannot be assumed.50 The repealing clause contained in Repub
the condition that a substantial conflict must be found in existing and prior laws.51

wealth Act No. 186 as amended by the Teves Retirement Law, the reliance of the petitioners on its general repealing clause is er
n the terms of the new and old laws.52

ule that to bring about an implied repeal, the two laws must be absolutely incompatible and clearly repugnant that the later law c

ws are presumed to be passed with deliberation and full knowledge of all laws existing on the subject. Such repeals are not favor

tion 41(n) of Republic Act No. 8291 with the Teves Retirement Law, we are guided by this Court’s pronouncement in Philippin
 wealth Act No. 186, as amended, uppermost in the mind of the Court is the fact that the best method of interpretation is that whi
preted and brought in accord with other laws as to form a uniform system of jurisprudence — interpretere et concordare legibus
materia are to be taken together, as if they were one law. x x x.57

for the GSIS employees, Commonwealth Act No. 186 as amended by the Teves Retirement Law talks about insurance or retirem
ision declared inoperative or abolished all supplementary retirement or pension plans.

to adopt a retirement plan and/or financial assistance for its employees, but a closer look at the provision readily shows that this
ment incentive plan or financial assistance must be for the purpose of retirement.

expected or usual time," while "incentive" means "serving to encourage, rouse, or move to action," or "something that constitut

n wherein GSIS, due to a reorganization, a streamlining of its organization, or some other circumstance, which calls for the term
voluntarily retire. This is the very reason why under the law, the retirement plan to be adopted is in reality an incentive scheme to

he petitioners’ assertion, should not be read independently of the purpose of an early retirement incentive plan. Under the doctrin
pany 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 ma
nduce employees to retire early or as an assistance plan to be given to employees retiring earlier than their retirement age.

for meritorious, faithful, and satisfactory service,"60 contradicts the nature of an early retirement incentive plan, or a financial as
n employee’s loyalty and lengthy service,61 in order to help him or her enjoy the remaining years of his life.

c Act No. 660 or Republic Act No. 8291, or must have previously retired under our existing retirement laws. This only means tha
ial assistance for the purpose of retirement."

inancial Plan" does not change its essential nature. A perusal of the plan shows that its purpose is not to encourage GSIS’s empl
ich is prohibited by the Teves Retirement Law.

stem (SSS) issued Resolution No. 56, which provided financial incentive and inducement to SSS employees who were qualified
h SSS would have to pay). Under SSS Resolution No. 56, those who retire under Republic Act No. 660 would be given a "financ
d in audit all claims for financial assistance under SSS Resolution No. 56 for being similar to those separate retirement plans or
ed COA’s disallowance and held that SSS Resolution No. 56 constituted a supplementary retirement plan proscribed by Section

er its charter to adopt such a resolution, unlike the GSIS, which was cloaked with authority to issue the questioned resolutions. F

onte has not been overturned or abandoned. The fact that Republic Act No. 8291 was approved and enacted after Conte is of no
odified by Section 41(n) of Republic Act No. 8291. Thus, it is just fitting that we find guidance in the application and interpretat

ation of any insurance or retirement plan – other than the GSIS – for government officers and employees, in order to prevent the

d 7641, were validly enacted after the Teves Retirement Law; thus, the evil that it seeks to avoid is the proliferation of those retir
nother such as the Development Bank of the Philippines, the Securities and Exchange Commission, the National Power Corpora

ant [by] reason of reorganization"68 pursuant to Republic Act No. 668369 or the Early Retirement Law. As for the additional bene
regularity.

urpose did not include the granting of benefits for early retirement. Neither did it provide benefits for either voluntary or involun
retirement or financial assistance plan, such authority was limited by the very law it was seeking to implement.
nancial Plan] contravenes [Section 28(b) of C.A. No. 186 as amended by R.A. No. 4968 or the Teves Retirement Law], and is th
enefit plan under the guise of such ‘financial assistance.’"70

clusion of the years in government service of previously retired employees, to wit:

lty incentive.71

sion’s ruling that for the purpose of computing or determining Santos’ separation pay, his years of service in his previous govern

ame services. More important, it would be in violation of the first paragraph of Section 8 of Article IX-B of the Constitution, wh

compensation, unless specifically authorized by law… .73

es in their previous government office into the computation of their retirement benefits under the GSIS RFP, notwithstanding the
4

cers, and employees, who are already receiving significantly higher salaries than their counterparts in other government agencie

GSIS EMPLOYEE SALARY GRADE GSIS MEMBER

GSIS Vice-President 27 Director III

46.36895 Length of Service 46.36895
₱ 110,775.00 Basic Salary ₱ 25,223.00
65 years old Age at Retirement 65 years old
August 21, 2001 Date of Retirement August 21, 2001
April 8, 1954 First Day in Govt Service April 8, 1954
April 8, 1954 First Day in GSIS/Other April 8, 1954
office

BENEFITS UNDER DIFFERENT MODES OF RETIREMENT

[GSIS Employee] [GSIS Member]

[GSIS RFP] RA 1616 RA 660 [GSIS RA 1616 RA 660
RFP]

90.92238 67.7379 46.36895 CGS N/A 67.7379 46.36895

10,071,926.00 7,503,665.87 NONE GA 1,708,553.05 NONE
3,176,380.80 5YLS 1,210,704.00
 52,939.68 BMP 20,178.40
NONE with refund NONE RRP with refund NONE

fter five years

prohibits the proliferation of additional retirement plans in our government offices. While it is true that a better compensation p
mployees’ exemption from Republic Act No. 678 or the Salary Standardization Law (SSL), under Sec. 43(d) of Republic Act No
of the salaries in the SSL.

must be remembered that none of the COA decisions nullified the Board Resolutions adopted by GSIS’s Board of Trustees. What
that it referred to its general counsel’s opinion on the GSIS RFP, as these were done only to reinforce COA’s position. They ha

e disallowances she had made, it is worthy to note that she had already informed Garcia of the GSIS RFP’s illegality even before
e Government Auditing Code of the Philippines, one of the responsibilities of COA’s legal office is to interpret pertinent laws an

bilities:

ormance of the functions of the Commission and the interpretation of pertinent laws and auditing rules and regulations; x x x.

s of jurisdiction on the part of respondents COA, Escarda, and Dimagiba, for disallowing in audit the portion of retirement benef
d were huge amounts of money imbued with public interest, since GSIS’s funds come from the contributions of its members. Th

suant to a valid law when they adopted the GSIS RFP. The petitioners also argue that the implementation of the GSIS RFP was
SIS RFP.

nts under the GSIS RFP.

the GSIS RFP, it was only in August 2001 when GSIS received COA’s opinion on the matter. Moreover, COA first decided the

he officers on the other hand believed that they were implementing a valid resolution. As we said in Buscaino v. Commission on

and held in abeyance the disbursement of the portion of retirement benefits under the GSIS RFP until the issue of its legality had

nce should not be held liable as they are entitled to the presumption of having exercised their functions with regularity and in go
sion on Audit Nos. 2003-062 and 2004-004 dated March 18, 2003 and January 27, 2004, are AFFIRMED with the MODIFICAT
red ILLEGAL, VOID, and OF NO EFFECT.

RENATO C. CORONA
Chief Justice

ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.

Associate Justice Associate Justice

ARTURO D. BRION DIOSDADO M. PERALTA

Associate Justice Associate Justice

On leave On leave
LUCAS P. BERSAMIN* MARIANO C. DEL CASTILLO*
Associate Justice Associate Justice

ROBERTO A. ABAD MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA

Associate Justice Associate Justice

MARIA LOURDES P. A. SERENO BIENVENIDO L. REYES

Associate Justice Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice

CERTIFICATION

e Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.
undred and Eighty-Six Entitled "An Act to Create and Establish a Government Service Insurance System, to Provide for its Adm

upreme Court and of the Court of Appeals, for the Enforcement of the Provisions Hereof by the Government Service Insurance S

the Social Security and Insurance Benefits of Government Employees and Facilitating the Payment Thereof Under Commonwe
 No. 147192, June 27, 2006, 493 SCRA 169, 176.

90 (1999).

a note 50 at 176-177.
).

, 1992, 206 SCRA 118, 121.

the Government Service, As Well As Involuntary Separation of Civil Service Officers and Employees Pursuant to Various Exec

(1998).
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