Today is Tuesday, January 22, 2019

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

NSTON F. GARCIA, REYNALDO P. PALMIERY, LEOVIGILDO P. ARRELLANO, ELMER T. BAUTISTA, LEONORA V. DE JESUS,
ION C. SINDAC, GLORIA D. CAEDO, ROMEO C. QUILATAN, ESPERANZA FALLORINA, LOLITA BACANI, ARNULFO MADRIA

YNALDO P. VENTURA, Respondents.

DECISION

o annul and set aside the Commission on Audit’s Decision Nos. 2003-062 and 2004-004 dated March 18, 2003 and January 27, 2004

ly: Chairman Hermogenes D. Concepcion, Jr.; Vice-Chairman and President and General Manager Winston F. Garcia (Garcia); Exec
. Nocete; Senior Vice Presidents Aurora Mathay, Enriqueta Disuangco, Amalio Mallari, Lourdes Patag, and Asuncion C. Sindac; Vice
and Lea M. Mendiola, together with all other officials and employees held liable by the Commission on Audit (COA) as petitioners in t

B. Escarda (Escarda), who rendered CAO I Decision No. 2002-009 dated May 27, 2002; the former Corporate Auditor of GSIS, Ma. C

em Act of 1997" (the GSIS Act) was enacted and approved, amending Presidential Decree No. 1146, as amended, expanding and in

Board of Trustees, upon the recommendation of the Management-Employee Relations Committee (MERCOM), approved Board Res

GSIS EMPLOYEES LOYALTY INCENTIVE PLAN

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

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

ump sum under RA 660 or RA 8291 or had previously retired under applicable retirement laws

t service and highest monthly salary/benefit received from GSIS

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

ed under GERSIP’97 are no longer qualified

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

puted based on 5 year lump sum

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

mputing the loyalty incentive

ce Group

rovided for a single rate for all positions, regardless of salary grade, in the computation of creditable service, viz:

nd effect.

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

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

view the GSIS RFP. This was denied by Garcia.10 Believing that the GSIS RFP was "morally indefensible,"11 Dimagiba sought the ass
1616 and the monthly pension of [Republic Act No.] 660 based on the creditable service computed at 150%.’"12
o COA Commissioner Raul C. Flores regarding the GSIS RFP. Alquizalas opined that the GSIS RFP is a supplementary retirement p
aw, the two laws must be harmonized absent an irreconcilable inconsistency. Alquizalas pronounced that Board Resolution Nos. 360
(n) of Republic Act No. 8291, which speaks of an early retirement plan or financial assistance.13

arded it to Garcia on August 23, 2001. Dimagiba, in her letter attached to Alquizalas’s Memorandum, added that for lack of legal basis
ovided for under Sections 48 to 50 of Presidential Decree No. 1445 and Section 37.1 of the Manual on Certificate of Settlement and B

eing "highly irregular and precipitate" as it was based on a mere opinion of COA’s counsel who had no authority to declare the resolu
ernment Corporations, as the power to do so was exclusively lodged before the courts. He also argued that the notice of disallowance
at the GSIS RFP was part and parcel of the compensation package that GSIS may provide for its personnel, by virtue of the powers g
Finally, Garcia requested Dimagiba to withdraw the notices of disallowance "in the interest of industrial peace in the GSIS."18

Disallowance on the grounds that:

Nov. 21, 2000 as amended by No. 6 dated Jan. 16, 2001 approving the Employees Loyalty Incentive Plan (ELIP) is null and void for
etirement 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;
Notice of Gloria Caedo (VP-SIAMS II);
Disallowance Asuncion Sindac (VP);
Amount
No./Period Payee Richard M. Martinez (VP &
Disallowed
covered: Controller);
July 24, 2001 Lea M. Mendiola (Manager, 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 M.

Dionisio Mendiola)

Notices of Disallowance dated October 23, 200122

Persons Liable:
Notice of Board of Trustees;
Disallowance Gloria Caedo (VP-SIAMS II);
Amount
No./Period Payee Asuncion Sindac (VP);
Disallowed
covered: Lea M. Mendiola (Manager, 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. Silang ₱ 532,869.65 Enriqueta Disuanco
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, 7,883,629.28 Lea M. Mendiola
2001
2001-17-412/ Elvira U. Geronimo ₱ Richard Martinez
July 17, 2001 5,648,739.26

Notices of Disallowance dated November 13, 200124

Persons Liable:
Notice of
Board of Trustees;
Disallowance Amount
Payee Asuncion Sindac (SVP);
No./Period Disallowed
Gloria Caedo (VP);
covered:
Lea M. Mendiola (Manager, HRSD)
 the payee; and
the following officers:

2001-20-412/ Modesto A. De Leon ₱ Daniel N. Mijares

August 28, 2,887,056.75 Romeo Quilatan
2001
2001-21-412/ Antonio S. De Castro ₱ 931,583.11 Reynaldo Palmiery
July 20, 2001 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

I that it was appealing the 21 Notices of Disallowance it had received from Dimagiba on various dates. It amended26 this Notice of Ap

er, to adopt and implement the GSIS RFP. They alleged that their plan was not unique to GSIS as other government agencies also h
our laws.29 The petitioners also argued that Republic Act No. 8291 had modified or repealed all provisions of the Teves Retirement La

ces made by Dimagiba. Escarda sustained the COA general counsel’s opinion and said that while the GSIS may have the power to a
is generally to streamline the organization by encouraging those who would not be qualified for compulsory retirement to retire early u
gencies. Thus, Escarda held that the GSIS RFP was in reality a supplementary retirement plan for these GSIS employees. Finally, E
nd is generally not effective to repeal a specific law like the Teves Retirement Law.32

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

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

II

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

III

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 A

IV

d the CAO I Decision No. 2002-009 and the Notices of Disallowance issued by GSIS Corporate Auditor Dimagiba are proper.34

ether or not the GSIS Board can reward themselves with unusually large benefits in the face of an unusually large actuarial deficit wh

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 T
der the GSIS RFP does not apply to either plans. COA added:

ot even the renaming of [the] Employees Loyalty Incentive Plan (ELIP) to Retirement Financial Plan (RFP), purportedly to conform wit
ct a third retirement plan for GSIS personnel only. This is all the more made manifest by the fact that even Board members who are n
egulation as provided in the statute it is supposed to administer.39

ound to be deficient actuarially by Fifteen Billion Pesos, and for it to reward its employees, who were already enjoying salaries higher
 adopted its own retirement plans did so pursuant to a valid law and under factual circumstances that were not present in the case o
of their functions.41Finally, COA averred that while its general counsel’s opinion boosted its position, such was not the basis of the di

but COA, in its Decision No. 2004-004 dated January 27, 2004,45 denied both motions and affirmed its Decision No. 2003-062 dated

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

F DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION, WHEN IN THE FOLLOWING MANNER:

own as the GSIS Act of 1997, and declare null and void duly adopted resolutions of petitioner GSIS which has the power and authorit

II

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

III

d 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

IV

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

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

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. 18

unctions:

pose of retirement for its own personnel; x x x.

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

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

ke is clear and manifest, the abrogation or repeal of a law cannot be assumed.50 The repealing clause contained in Republic Act No.
hat a substantial conflict must be found in existing and prior laws.51
Act No. 186 as amended by the Teves Retirement Law, the reliance of the petitioners on its general repealing clause is erroneous. T
new and old laws.52

bring about an implied repeal, the two laws must be absolutely incompatible and clearly repugnant that the later law cannot exist wit

presumed to be passed with deliberation and full knowledge of all laws existing on the subject. Such repeals are not favored for a law

(n) of Republic Act No. 8291 with the Teves Retirement Law, we are guided by this Court’s pronouncement in Philippine International

ct No. 186, as amended, uppermost in the mind of the Court is the fact that the best method of interpretation is that which makes law
t in accord with other laws as to form a uniform system of jurisprudence — interpretere et concordare legibus est optimus interpreten
together, as if they were one law. x x x.57

GSIS employees, Commonwealth Act No. 186 as amended by the Teves Retirement Law talks about insurance or retirement plans ot
e or abolished all supplementary retirement or pension plans.

pt a retirement plan and/or financial assistance for its employees, but a closer look at the provision readily shows that this power is no
ancial assistance must be for the purpose of retirement.

or usual time," while "incentive" means "serving to encourage, rouse, or move to action," or "something that constitutes a motive or s

n GSIS, due to a reorganization, a streamlining of its organization, or some other circumstance, which calls for the termination of som
is the very reason why under the law, the retirement plan to be adopted is in reality an incentive scheme to encourage the employee

oners’ assertion, should not be read independently of the purpose of an early retirement incentive plan. Under the doctrine of noscitur
n 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 refe
arly or as an assistance plan to be given to employees retiring earlier than their retirement age.

torious, faithful, and satisfactory service,"60 contradicts the nature of an early retirement incentive plan, or a financial assistance plan,
d lengthy service,61 in order to help him or her enjoy the remaining years of his life.

o. 660 or Republic Act No. 8291, or must have previously retired under our existing retirement laws. This only means that the employe
r the purpose of retirement."

Plan" does not change its essential nature. A perusal of the plan shows that its purpose is not to encourage GSIS’s employees to ret
y the Teves Retirement Law.

SSS) issued Resolution No. 56, which provided financial incentive and inducement to SSS employees who were qualified to retire, to a
pay). Under SSS Resolution No. 56, those who retire under Republic Act No. 660 would be given a "financial assistance" equivalent
assistance under SSS Resolution No. 56 for being similar to those separate retirement plans or incentive/separation pay plans adopte
olution No. 56 constituted a supplementary retirement plan proscribed by Section 28(b) of Commonwealth Act No. 186, as amended

harter to adopt such a resolution, unlike the GSIS, which was cloaked with authority to issue the questioned resolutions. Furthermore

s not been overturned or abandoned. The fact that Republic Act No. 8291 was approved and enacted after Conte is of no moment, as
n 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 C

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

, were validly enacted after the Teves Retirement Law; thus, the evil that it seeks to avoid is the proliferation of those retirement plan
the Development Bank of the Philippines, the Securities and Exchange Commission, the National Power Corporation, the COA, the

] reason of reorganization"68 pursuant to Republic Act No. 668369 or the Early Retirement Law. As for the additional benefits extended
 did not include the granting of benefits for early retirement. Neither did it provide benefits for either voluntary or involuntary separatio
stance plan, such authority was limited by the very law it was seeking to implement.

an] 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
such ‘financial assistance.’"70

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

ntive.71

ng that for the purpose of computing or determining Santos’ separation pay, his years of service in his previous government office sh

vices. More important, it would be in violation of the first paragraph of Section 8 of Article IX-B of the Constitution, which proscribes ad

ation, unless specifically authorized by law… .73

r previous government office into the computation of their retirement benefits under the GSIS RFP, notwithstanding the fact that they

d employees, who are already receiving significantly higher salaries than their counterparts in other government agencies, COA illustr

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

ears

s the proliferation of additional retirement plans in our government offices. While it is true that a better compensation package will no
m Republic Act No. 678 or the Salary Standardization Law (SSL), under Sec. 43(d) of Republic Act No. 8291. As shown in the above

membered that none of the COA decisions nullified the Board Resolutions adopted by GSIS’s Board of Trustees. What the COA deci
nsel’s opinion on the GSIS RFP, as these were done only to reinforce COA’s position. They have no bearing upon the weight of COA

wances she had made, it is worthy to note that she had already informed Garcia of the GSIS RFP’s illegality even before she sought C
iting Code of the Philippines, one of the responsibilities of COA’s legal office is to interpret pertinent laws and auditing rules and regu

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

diction on the part of respondents COA, Escarda, and Dimagiba, for disallowing in audit the portion of retirement benefits in excess o
oney imbued with public interest, since GSIS’s funds come from the contributions of its members. Thus, GSIS’s business is to keep in

o a valid law when they adopted the GSIS RFP. The petitioners also argue that the implementation of the GSIS RFP was merely mini

der the GSIS RFP.

S RFP, it was only in August 2001 when GSIS received COA’s opinion on the matter. Moreover, COA first decided the issue only in 2

ers on the other hand believed that they were implementing a valid resolution. As we said in Buscaino v. Commission on Audit,79 the r

d in abeyance the disbursement of the portion of retirement benefits under the GSIS RFP until the issue of its legality had been resolv

ould not be held liable as they are entitled to the presumption of having exercised their functions with regularity and in good faith.

dit Nos. 2003-062 and 2004-004 dated March 18, 2003 and January 27, 2004, are AFFIRMED with the MODIFICATION that only the
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

had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

nd Eighty-Six Entitled "An Act to Create and Establish a Government Service Insurance System, to Provide for its Administration, and

Court and of the Court of Appeals, for the Enforcement of the Provisions Hereof by the Government Service Insurance System, and to

cial Security and Insurance Benefits of Government Employees and Facilitating the Payment Thereof Under Commonwealth Act No.
7192, June 27, 2006, 493 SCRA 169, 176.

9).

0 at 176-177.

206 SCRA 118, 121.

ernment Service, As Well As Involuntary Separation of Civil Service Officers and Employees Pursuant to Various Executive Orders A

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