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 -

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12 years 5 months offices and renders the required office hours. This rule has been
emphasized in CSC Resolution No. 90-1087, pertinent portion Displeased, petitioner sought reconsideration of the subject CSC
c) As Board of Regent MMSU of which reads as follows: opinion in a Letter5 addressed to the CSC and the GSIS.
Petitioner insisted on the inclusion of his services rendered in
- "Under the Leave Law and Rules, Leave Privileges are accorded the MECO, PHIVIDEC and MMSU in the computation of his
only to regular, temporary, provisional or casual officials and retirement benefits pursuant to Sections 10 (b) and 2 (l) of
4 years 7 months employees who are rendering full time service in an agency or Republic Act (RA) No. 8291.6
government. However, the status of appointment of employees
d) As Director of MECO in the government further identify certain specifications in the The GSIS indorsed7 the Letter to the CSC with a view that the
entitlement of leave privileges; hence, a part-time employee is same is within the jurisdiction of the latter.
- not entitled to leave unless he works part-time in two different
offices and renders the required office hours (Manual of Leave The CSC, for its part, rendered Resolution No. 9919408 dated
2 years 3 months Administration, p.3.2). Thus it is completely inconceivable that August 31, 1999 denying petitioner’s request for reconsideration
members of the various Regulatory Board of the PRC who hold of the subject CSC opinion, thus:
Total 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 WHEREFORE, the Commission hereby resolves to deny the
- leave benefits in consideration of their services would be instant request of Simeon Valdez. Accordingly, the assailed
tantamount to double compensation, the receipt of which is Opinion is affirmed.
33 years 15 months constitutionally prescribed. x x x This has to be so, otherwise
they would be enjoying leave privileges over and above what is Petitioner then elevated the matter to the CA by way of petition
On February 23, 1999, petitioner received two mails, one from provided in the leave Law and Rules (Valdez v. Commission on for review on certiorari against the CSC and the GSIS. There,
the CSC and the other from GSIS. The letter from CSC Audit: GR 87277, 25 May 1989). Besides, CSC Memorandum petitioner argued that his services rendered as Director of
contained the challenged January 14, 1999 Opinion3 denying Circular No. 43, series of 1989 (Retirement of Employees MECO should have been credited for retirement purposes and
the accreditation of petitioner’s services as former Director of Holding More than One Positions), is explicit that ‘an that his salary thereat should have been the highest remuneration
MECO and of PHIVIDEC and as Member of the Board of appointment to a second position must be regarded only as considered in the computation of his retirement benefits.
Regents of MMSU, pertinently reading as follows: imposing additional duties to the regular functions of an Petitioner likewise insisted that his respective tenures as
employee and consequently an employee can retire only from Member of the Board of Regents of Ilocos Norte Institute of
Section 2 (1), Article IX of the 1987 Constitution provides that his regular or main position and not from his additional Technology (INIT) and the MMSU, as Director of the
the "civil service embraces all branches, subdivisions, position." PHIVIDEC and as OIC Vice-Governor of Ilocos Norte be
instrumentalities and agencies of the Government, including included as government service in the computation of his
government-owned or controlled corporations with original Let is (sic) be stressed that for purposes of computation of retirement benefits.
charters." (Underscoring Ours). Equivocably, subsidiary government service, only "full-time services with
corporations created under the Corporation Code are not compensation" are included (Section 10 (b), RA 8291). On July 31, 2000, the CA rendered the herein challenged
considered part of the Civil Service. Since MECO is a Moreover, under Section 2(l) of RA 8291, "compensation" decision dismissing the petition and affirming both the January
subsidiary corporation of the government governed by its refers to the basic pay or salary received by an employee, 14, 1999 Opinion and Resolution No. 991940 of the CSC.
Articles of Incorporation and By-Laws, whatever services pursuant to his election/appointment, excluding per diems, Dispositively, the Decision reads:
rendered therein shall not be considered part and parcel of bonuses, overtime pay, honoraria, allowances and other
government service. emoluments received in addition to the basic pay which are not With the foregoing, the assailed CSC Opinion dated 14 January
integrated into the basic pay under existing laws. (Underscoring 1999 and Resolution No. 991940 dated 31 August 1999 are
xxx Ours) hereby AFFIRMED.

We note that at the time you were still a member of the Board of Premised on our answer in your first query, your services at the SO ORDERED.
Regents of the Mariano Marcos State University (MMSU) from MECO for 2 years and 3 months did not earn any leave credit
1978 to 1992, you were likewise holding the positions of for you. Thereafter, petitioner filed a motion for reconsideration of the
Philvidic Director (November 1974-March 1987) and as OIC- foregoing decision and for the first time raised as an issue the
Vice Governor (August 1986-March 1987). As such, it must be The correspondence from the GSIS contained a Letter4 and a lack of jurisdiction of the CSC and the CA over the case.
reiterated that a part-time employee is not entitled to leave Retirement Voucher informing petitioner of the approval of his
benefits unless he works part-time in two different government retirement benefits computed on the basis of the CSC’s opinion.

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In the resolution of October 17, 2000, the CA denied PETITIONER THE RIGHT TO A RETIREMENT BENEFITS perusal of the record shows that no such finding was ever made,
petitioner’s motion for reconsideration. COMPUTED AT HIS HIGHEST SALARY RATE WITH neither by the CSC in its January 14, 1999 Opinion and
MECO. Resolution No. 991940 nor by the CA in the herein challenged
Petitioner now comes to this Court via this petition for July 31, 2000 Decision in CA-G.R. SP No. 54870, as reiterated
certiorari. Although the CSC was the author of the challenged The petition is utterly bereft of merit. the resolution of October 17, 2000.
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 First off, petitioner’s argument that the GSIS violated RA No. The remaining three assigned errors being interrelated, we shall
petition. Petitioner now lays all the blame on the GSIS as he 8291 when it indorsed petitioner’s claim to the CSC for address them together. Petitioner would have the Court reverse
raises the following assigned errors: resolution is untenable. Section 10 of RA No. 8291, otherwise the CA’s rejecting his assertion that his services rendered in the
known as the "Government Service Insurance System Act of MECO, MMSU, PHIVIDEC and as OIC Vice-Governor of
I. 1997," explicitly authorizes the GSIS and the CSC to work hand Ilocos Norte should be credited in the computation of his
in hand in the computation of service in the government for the retirement benefits. We are not convinced for two reasons. First,
THE INDORSEMENT OF THE GSIS OF PETITIONER’S purpose of availment of the retirement benefits under the said the assailed CA decision affirming the impugned CSC issuances
CLAIM FOR RETIREMENT BENEFITS TO THE CSC Act. Pertinently, the said Act provides: is anchored on law and jurisprudence. Thus, we quote with
SUFFERS JURAL INFIRMITY AND ALL THE RESULTING approval the following excerpt from the decision of the CA:
CSC PROCEEDINGS AND RESOLUTIONS THEREON ARE Sec. 10. Computation of Service.―(a) The computation of
NULL AND VOID AB INITIO, INCLUDING THE NOW service for the purpose of determining the amount of benefits None other than the 1987 Constitution of the Philippines, the
QUESTIONED COURT OF APPEALS DECISION AND payable under this Act shall be from the date of original Highest Law of the Land, confines the scope of the civil service
RESOLUTION (ANNEXES A AND B), FOR LACK OF appointment/election, including periods of service at different as embracing "all the branches, subdivisions, instrumentalities
JURISDICTION. times under one or more employers, those performed overseas and agencies of the government, including government-owned
under the authority of the Republic of the Philippines, and those and controlled corporations with original charters."
II. that may be prescribed by the GSIS in coordination with the
Civil Service Commission. xxx
ASSUMING THAT CSC AND THE COURT OF APPEALS
HAVE JURISDICTION, THE HOLDING THAT Besides, the petitioner himself sought the CSC’s opinion on In Philippine National Company-Energy Development
PETITIONER’S CLAIM FOR RETIREMENT BENEFITS matters related to his application for retirement. He too filed a Corporation v. Leogardo, 175 SCRA 26, 30 (1989), the
HAD ALREADY PRESCRIBED IS DEFINITELY A LEGAL motion for the CSC to reconsider its opinion. Surely, the GSIS Supreme Court categorically ruled that "under the present law,
ERROR. could not be faulted for merely referring his letter seeking the test in determining whether a government-owned or
reconsideration of the CSC opinion which was addressed to the controlled corporation is subject to the Civil Service Law is the
III. GSIS, stated, "I respectfully seek to reconsider the denial of the manner of its creation such that government corporations
Chairman of the Civil Service Commission of the other benefits created by special charter are subject to its provision while those
ASSUMING THAT CSC AND THE COURT OF APPEALS xxx." Moreover, the GSIS’ action on petitioner’s claim relied on incorporated under the General Corporation Law are not within
HAVE JURISDICTION, THE DENIAL OF THE the CSC’s Opinion.9 Unless the CSC would reconsider or revise its coverage."
ACCREDITATION OF PETITONER’S SERVICES its earlier opinion, which it did not, it was unlikely for the GSIS
RENDERED WITH MECO IS PLAINLY A LEGAL ERROR. to reconsider its previous opinion, given the statutory mandate With this in mind, the CSC was not in error in holding that:
for the said two institutions of government to coordinate on the
IV. matter of computation of government services of retirees. "It is noted that MECO was created before the effectivity of the
1987 Constitution. In this regard, granting without admitting
THE LACK OF JURISDICTION EXTENDS TO THE COURT While it is a rule that jurisdictional question may be raised at that at the time of its incorporation (during the effectivity of the
OF APPEALS’ AFFIRMING THE EXCLUSION OF any time, this, however, admits of an exception where, as in this 1973 Constitution) MECO was yet under the coverage of the
PETITIONER’S SERVICES RENDERED WITH INIT, case, estoppel has supervened. The Court has, time and again, Philippine Civil Service, the appellant’s (i.e., petitioner’s
MMMCST, MMSU, PHIVEDEC AND OIC VICE- frowned upon the undesirable practice of a party submitting his services rendered thereat for that period, however, still cannot
GOVERNOR OF ILOCOS NORTE. case for decision and then accepting the judgment only if be accredited as government service because at the time of his
favorable, and attacking it for lack of jurisdiction when retirement/filing of the case/complaint, the abovequoted
V. adverse.10 provision (i.e., Section 2(1), Article IX) of the 1987 Constitution
has already come into effect. As held by the Honorable Supreme
THE LACK OF JURISDICTION OF THE CSC AND THE Secondly, petitioner argues that the CSC and the CA Court in Lumanta, et al. vs. National Labor Relations
COURT OF APPEALS, LAWLESSLY DEPRIVED erroneously held that his claim had already prescribed. A Commission and Food Terminal, Inc. (170 SCRA 79),

02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 3 | 20

‘jurisdiction is determined as of the time of the filing of the Sec. 5. The Congress shall provide for the standardization of herein petition should be dismissed pursuant to SC Circular No.
complaint.’" compensation of government officials and employees, including 2-90.16
those in government-owned or controlled corporations with
The established rule is that the statute (in this case, the original charters, taking into account the nature of the WHEREFORE, in view of the foregoing, the petition is
Constitution) in force at the time of the commencement of the responsibilities pertaining to, and the qualifications required for DISMISSED and the assailed decision and resolution of the CA
action determines the jurisdiction of the court (in this case, the their positions. are AFFIRMED.
administrative body).
The salary received by petitioner during his stint at MECO SO ORDERED.
It was likewise no error for the CSC to deny accreditation of appears to be way beyond that authorized by RA No. 6758,12
petitioner’s services rendered for MMSU, PHIVIDEC and INIT, otherwise known as the Salary Standardization Law. For this G.R. No. L-49535 October 28, 1988*
concurrently, because of the lack of sufficient basis to compute reason, it is doubtful that petitioner’s employment with the ROMANA M. CRUZ, petitioner,
services rendered therefor converted to their full-time MECO is embraced by the civil service. Otherwise, the salary vs.
equivalent, reckoned in hours or days actually rendered, using a rate received by petitioner from MECO would not have been HON. FRANCISCO TANTUICO and HON. GREGORIO
Forty-(40) hour week and 52 weeks a year as basis, in legally feasible, unless there was a law exempting the MECO G. MENDOZA, in their capacity as Acting Chairman and
accordance with Section 5.3, Rule V of the Rules and from the Salary Standardization Law. Treasurer of the Philippines of the Commission on Audit
Regulations Implementing the Government Service Insurance and the Bureau of Treasury, respondents.
System Act of 1997. Finally, the instant petition purports to be a petition for certiorari
under Rule 65 of the Rules of Court. However, a cursory The relief sought from the Court, in addition to the setting aside
Relevantly, the last paragraph of Section 10 of RA No. 8291 reading of the issues raised discloses that petitioner’s arguments of certain orders of respondent COA Acting Chairman, is the
dictates that for purposes of computation of government service, are not anchored on lack of jurisdiction but on questions of law issuance of an order for the release of petitioner's retirement
only full-time services with compensation are included: which fall within the realm of petitions for review on certiorari benefits. Preliminary to the grant or denial thereof, this Court is
under Rule 45 of the Rules of Court. asked to pass upon the liability of petitioner Romana M. Cruz
For the purpose of this section, the term service shall include for paying upon presentment several treasury warrants with a
full time service with compensation: Provided, That part time It is an elementary principle that a petition for certiorari under total value of P21,545.08, but which turned out to be issued to
and other services with compensation may be included under Rule 65 cannot be used if the proper remedy is appeal. Being an fictitious payees.
such rules and regulations as may be prescribed by the GSIS. extraordinary remedy, a party can only avail himself of
certiorari, if there is no appeal, or any plain, speedy, and An investigation of the anomaly revealed that it was the
While petitioner invokes the proviso in the above-quoted adequate remedy in the ordinary course of law.13 Here, appeal handiwork of a "syndicate" composed of employees of the
provision of law, the GSIS, which has been given the authority is the correct mode but was not seasonably utilized by the Budget Commission and the Department of Education and
to include part-time services in the computation, has pointed out petitioner. Resort to this petition for certiorari is, therefore, Culture (DEC). Using falsified computations and service
that the services in the MMSU, PHIVIDEC and as OIC Vice- improper because certiorari cannot be used as a substitute for a records, some sixty-eight (68) treasury warrants were issued and
Governor of Ilocos Norte cannot be credited because, aside from lost remedy of appeal.14 Petitions for certiorari are limited to made payable to fictitious or "ghost" teachers in Region IX
having been rendered part-time in said agencies, the said resolving only errors of jurisdiction. It is not to stray at will and (Zamboanga del Sur), all of which appeared to be genuine and
positions were without compensation as defined in Section 2(i) resolve questions or issues beyond its competence such as errors duly signed by the authorized signatories of the DEC. Twenty-
of RA No. 8291.11 of judgment. For, it is basic that certiorari under Rule 65 is a eight (28) of these warrants are the subject of this case.
remedy narrow in scope and inflexible in character. It is not a
Petitioner’s insistence that the emoluments he received as general utility tool in the legal workshop.15 It offers only a Acting on the request of the Treasurer of the Philippines that the
MECO director be the basis in the computation of his retirement limited form of review. Its principal function is to keep an encashment of the treasury warrants be dishonored and that the
benefits, the same being the highest basic salary rate, is inferior tribunal within its jurisdiction. It can be invoked only appropriate "charge back be undertaken, the National Cashier
unavailing. Indeed, the salaries that he received at the time he for an error of jurisdiction, that is, one where the act complained recommended that action to effect restitution be taken against
served as MECO director were unusually high for any position of was issued by the court, officer or a quasi-judicial body the parties to the falsification, particularly, Editha Gonzales and
covered by the civil service. Petitioner received a monthly pay without or in excess of jurisdiction, or with grave abuse of Ceferino M. Cruz, instead of proceeding against Romana Cruz
of P40,000.00 in addition to a P65,000.00 representation and discretion which is tantamount to lack or in excess of who was considered to have done her routine task as paying
travel allowance and US$2,500.00 per diem for overseas board jurisdiction. It is not to be used for any other purpose, such as to teller and to have acted in good faith in encashing the treasury
meetings. The Constitution itself mandated the standardization cure errors in proceedings or to correct erroneous conclusions of warrants [Rollo, pp. 36-37.]
of compensation of government officials and employees covered law or fact, as what petitioner would like the Court to venture
by the civil service under Article IX B, Section 5, viz: into. A petition for certiorari not being the proper remedy to Subsequently, however, the Auditor assigned to the Treasury
correct errors of judgment as alleged in the instant case, the Vault and Banking Audit Division of the Bureau of Treasury
02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 4 | 20
requested the National Cashier to "cause the dishonor of the 1. Petitioner denies any liability for the value of the
subject warrants and the encashment thereof charged back to the [Rollo, p. 50.] subject treasury warrants. Assailing the order of the respondent
account of the banks concerned or to Miss Cruz, as the case may COA Acting Chairman as embodied in the 2nd indorsement,
be." [Rollo, p. 38.] The first charge back against Miss Cruz as Manifesting his disagreement with the above ruling, the petitioner contends that basing her liability on the theory that
made on August 17, 1976 in the amount of the P15,308.91 and Treasurer under the 5th indorsement opined ". . . that the loss of she was the last indorser thereof is erroneous, as she was not an
subsequently increased by P6,236.17 on August 23, 1976 thus government funds arising from the encashment of the subject indorser.
making her total cash accountabilities amount to P21,545.08. treasury warrants as a result of the negligent act of the DEC in
The Auditor also formally demanded that petitioner produce the issuing these treasury warrants to fictitious persons, should be The facts support the conclusion that petitioner was not an
missing funds while the Acting National Cashier required her to borne by the DEC and not by Miss Romana Cruz who paid them indorser of the treasury warrants. Her only participation in the
increase her cash accountability [Rollo, p. 40.] in good faith and pursuant to her duty as Cashier IV of this encashment of the treasury warrants was in her capacity as
Treasury to pay treasury warrants and government checks cashier or paying teller of the Bureau of Treasury. Her act of
In her written explanations to these demands, petitioner stressed presented to her for payment." [Rollo, pp. 51-53.] paying the amounts reflected on the treasury warrants did not
that she paid the warrants in good faith as there was nothing on constitute an indorsement but a discharge by payment of the
their faces or in the endorsements to raise any doubt as to their A request for reconsideration of the order of the respondent instruments.
genuineness. Petitioner requested that in lieu of charging her for COA Acting Chairman contained in the 2nd indorsement was
the shortage, "the same be dropped from the cash book and filed by petitioner on February 20, 1978. This was followed by a Petitioner submits that since the questioned treasury warrants
simultaneously recorded as a receivable (from the guilty request, sometime in August, 1978, addressed to the COA were genuine in all respects, she had no way of determining
party/parties) on the books of the Bureau of Treasury [Rollo, pp. Acting Chairman for the early issuance of a clearance in whether the same were payable to fictitious or non-existing
41-42.] connection with petitioner's retirement from the Bureau of payees.
Treasury on March 30, 1978 [Rollo, p. 56.]
Acting on the matter which was formally referred to him, the It is not disputed that on the face of the treasury warrants, there
respondent Commission on Audit (COA) Acting Chairman On November 27, 1978, petitioner received a letter from appeared no irregularity The warrants were signed by the
issued the following: respondent Treasurer dated November 13, 1978 informing her authorized signatories of the DEC. Furthermore, Editha
that under the 8th indorsement, the COA Acting Chairman Gonzales, the party who presented the treasury warrants for
2nd Indorsement denied her appeal and letter of reconsideration while reiterating encashment, was a bona fide employee of the DEC who
October 25, 1976 his previous directive under the 2nd indorsement. The regularly cashed warrants with the petitioner and was therefore
Treasurer's letter particularly stated: known to her personally. Considering these circumstances, the
Respectfully returned, thru the Manager, Accountancy Office, encashment by the petitioner of the subject treasury warrants did
this Commission, to the Treasurer of the Philippines, Bureau of xxx xxx xxx not amount to an act of negligence for which she should be
the Treasury, Manila. made liable.
This Treasury expressed its support to your representation under
It appearing from these papers that it was Miss Romana Cruz, its 5th indorsement to the Chairman of the Commission on The view that petitioner had not been negligent is shared by the
Cashier IV, Cash Division, that Bureau, who paid the treasury Audit dated November 18, 1977, xerox copy enclosed, but Bureau itself, which has cleared her of any responsibility for the
warrants in question totalling P21,545.08 to wrong or fictitious unfortunately, the COA has a different view. defalcation. In the investigations conducted after discovery of
payees and, therefore, is the last indorser liable for the value the anomaly, she was never implicated. Thus, when the
thereof, it is hereby directed that she be required to restore and That being the case, much to our regret, the value of the subject perpetrators were charged before the then Court of First Instance
restitute to that Bureau the said amount, without prejudice to her 28 treasury warrants in the total amount of P21,545.08 is being of Manila for Estafa Thru Falsification on eighty-three (83)
right of recourse against the guarantors of said warrants, if any. deducted from your retirement benefits from this Treasury, the counts, she was not included in the charge.
same to be applied in refund of your shortage of P21,545.08 in
In case of failure of Miss Cruz to effect the restitution of said your accountability, arising from the encashment of the said In behalf of the public respondents, the Solicitor General
amount as herein directed, her salary should be withheld subject 28 treasury warrants. [Rollo, p. 57.] counters that petitioner's failure as a paying teller to ascertain
pursuant to Section 624 of the Revised Administrative Code and that the person who presented the warrants was not a holder in
applied in settlement of her liability. In this petition for review on certiorari, the petitioner seeks a due course renders her liable for the value thereof,
ruling setting aside the orders of the respondent COA Acting notwithstanding that the third endorser who encashed the said
Advice of the action taken herein is desired. Chairman contained in the 2nd and 8th indorsements and for the treasury warrants was known to her, and, therefore adequately
release of the amount of P21,545.08 in her favor. Identified. To support this contention, he cites the Manual of the
(Sgd.) Francisco S. Tantuico, Jr. Bureau of Treasury which provides as follows:
Acting Chairman

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Sec. 3250.1. Requirements when party is an indorsee.— 30, 1978 were never withheld. Thus, the order of the Treasurer be attached or levied upon execution. *** The respondents
When the party encashing the warrant or check is an indorsee, to deduct the value of the treasury warrants from her retirement contend that the withholding of the corresponding amount of the
he shall be referred first to the National Cashier before any benefits [Rollo, p. 57.] petitioner's gratuity was made with a view to its application to
payment is made by the Paying Teller. The National Cashier the payment of his indebtedness to the Government, and that
shall interview the party and should be satisfied that the party is Consequently, on March 30, 1978, petitioner applied with and such action is authorized by section 624 of the Administrative
a holder in due course or has legal or rightful title to the was cleared by the Bureau of Treasury from all money and Code which provides that "When any person is indebted to the
instrument. The encashing party should also be required to property responsibilities, except for the sum of P21,545.08 government of the Philippine Islands or Government of the
present any of the documents (identification papers) enumerated representing the value of the twenty-eight (28) treasury warrants United States, the Insular Auditor may direct the proper officer
in Section 3250.0 above. [Rollo, p. 123.] The Bureau of Treasury released to the to withhold the payment of any money due him or his estate, the
petitioner the sum of P23,980.77 under TW No. B-04,623,521, same to be applied in satisfaction of such indebtedness.
At this stage, Sec. 3250.1 of the Manual of the Bureau of dated January 2, 1979, as "retirement gratuity" [Rollo, p. 124.]
Treasury cannot be made the basis for holding the petitioner Presumably, since there was an order to deduct the amount of While Section 3 of Act No. 4051 refers merely to attachment or
liable considering the absence from the record of any mention of P21,545.08 from her retirement benefits, the amount of levy upon execution, we are of the opinion that the exemption
any investigation concerning her possible liability under said P23,980.77 released to her was only a portion of the total should be liberally construed in favor of the pensioner. Pension
section. Thus, facts that would prove or disprove her liability amount she was entitled to. in this case is a bounty flowing from the graciousness of the
under this section were never established. Moreover, in the Government intended to reward past services and, at the same
series of indorsements by the public respondents leading to the As mentioned above, no neligence attended the petitioner's time, to provide the pensioner with the means with which to
present case, See. 3250.1 was never mentioned as the basis for encashment of the treasury warrants. Even assuming that. she support himself and his family. Unless otherwise clearly
petitioner's liability. In fact, the respondent COA Acting could be held liable for non- compliance with or violation of provided, the pension should insure wholly to the benefit of the
Chairman ruled that petitioner was liable for a totally different some rule or regulation, this Court agrees with the petitioner that pensioner. It is true that the withholding and application of the
reason, i.e. that she was the last indorser of the treasury warrants Section 624 of the Revised Administrative Code cannot be amount involved was had under section 624 of the
[Rollo, p. 50.] It is only now that she has brought her case construed to authorize a deduction of the value of the treasury Administrative Code and not by any judicial process, but if the
before this Court that petitioner is sought to be held liable on the warrants from her retirement benefits. Said section provides: gratuity could not be attached or levied upon execution in view
basis of Sec. 3250.1. This cannot be allowed, for otherwise it of the prohibition of section 3 of Act No. 4051, the
would be tantamount to sanctioning a change of theory on Sec. 624. Retention of salary for satisfaction of indebtedness.— appropriation thereof by administrative action, if allowed, would
appeal, which would be unfair to the adverse party [Philippine When any person is indebted to the Government of the lead to the same prohibited result and enable the respondents to
Rabbit Bus Lines, Inc. v. Phil-American Forwarders, Inc., G.R. Philippine Islands (or Government of the United States), the do indirectly what they can not do directly under section 3 of
No. L-25142, March 25, 1975, 63 SCRA 231.] Insular Auditor may direct the proper officer to withhold the Act No. 4051. Act No. 4051 is a later statute having been
payment of any money due him or his estate, the same to be approved on February 21, 1933, whereas the Administrative
Having established that petitioner was not negligent in applied in satisfaction of such indebtedness. Code of 1917 which embodies section 624 relied upon by the
encashing the treasury warrants, justice dictates that she should respondents was approved on March 10 of that year.
not be made personally liable for the consequent losses. The Solicitor General, in his comment, is in agreement with the Considering section 3 of Act No. 4051 as an exception to the
petitioner that her retirement pay may not be withheld by general authority granted in section 624 of the Administrative
2. An analysis of the arguments presented as they relate administrative fiat to answer for the shortage incurred while in Code, antagonism between the two provisions is avoided. [Id. at
to the facts would show that the issue petitioner actually poses is office [Rollo, p. 99.] This has also been the interpretation 264; Emphasis supplied.]
the propriety of the Treasurer's order to deduct the amount of applied by the respondent COA Acting Secretary in similar
P21,545.08, the value of the twenty-eight (28) treasury warrants, cases [Rollo, pp. 62-63.] WHEREFORE, the petition is GRANTED and the order of the
from her retirement benefits, as embodied in the Treasurer's respondent COA Acting Chairman Francisco S. Tantuico Jr. to
letter to her dated November 13, 1978 [Rollo, p. 57], That the retirement pay accruing to a public officer may not be withhold payment of petitioner's salary and the consequent
considering that nowhere is it stated in the COA Acting withheld and applied to his indebtedness to the government is directive of the respondent Treasurer Gregorio G. Mendoza to
Chairman's 2nd and 8th indorsements that the amount should be settled. In Hunt v. Hernandez [G.R. No. 45665, 36 O.G. 263 deduct the amount of P21,545.08 from petitioner's retirement
deducted from her retirement benefits. In fact, the 2nd (1937], the Court, through Justice Laurel, explained why. benefits are SET ASIDE. This decision is IMMEDIATELY
indorsement provided that her salary should be withheld and EXECUTORY.
applied in settlement of her liability ** while the 8th The question to be determined is whether or not the gratuity of
indorsement merely reiterated the 2nd [Rollo, pp. 50 and 59.] the petitioner in this case can be withheld and applied to the SO ORDERED.
payment of his remaining indebtedness to the San Lazaro
Despite the orders of the Acting Chairman of the Commission Investment Fund notwithstanding the provision of section 3 of G.R. No. 96422 February 28, 1994
on Audit, petitioner's salaries prior to her retirement on March Act No. 4051 that the gratuity provided for in this Act shall not

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 FRANCISCO S. TANTUICO, JR., petitioner, all equipment acquired during the tenure of his two Respondent Chairman rendered a Decision dated November 20,
vs. predecessors. 1989, in the administrative case filed against the principal
HON. EUFEMIO DOMINGO, in his capacity as Chairman members of the first inventory committee. He found them guilty
of the Commission on Audit, ESTELITO SALVADOR, On May 7, 1987, respondent Chairman indorsed petitioner's as charged and issued them a reprimand. The other members
MARGARITO SILOT, VALENTINA EUSTAQUIO, retirement application to the Government Service Insurance were meted a stern warning, except for one who was exonerated
ANICIA CHICO and GERMINIA PASCO, respondents. System (GSIS), certifying, among other matters, that petitioner for not taking part in the preparation of the inventory report.
was cleared of money and property accountability (Rollo, p. 52).
This is a petition for certiorari, prohibition and mandamus, with The application was returned to the COA pursuant to R.A. No. In a letter dated December 21, 1989, a copy of which was
prayer for temporary restraining order or preliminary injunction, 1568, which vests in the COA the final approval thereof. received by petitioner on December 27, 1989, respondent
under Rule 65 of the Revised Rules of Court. Chairman informed petitioner of the approval of his application
On September 25, 1987, the inventory committee finally for retirement under R.A. No. 1568, effective as of March 9,
The petition mainly questions the withholding of one-half of submitted its report, recommending petitioner's clearance from 1986 (Rollo, pp. 68-69). However, respondent Chairman added:
petitioner's retirement benefits. property accountability inasmuch as there was no showing that
he personally gained from the missing property or was primarily . . . In view, however, of the audit findings and inventory report
I liable for the loss thereof (Rollo, pp. 53-58). adverted to above, payment of only one-half (½) of the money
value of the benefits due you by reason of such retirement will
On January 26, 1980, petitioner was appointed Chairman of the Not satisfied with the report, respondent Chairman issued a be allowed, subject to the availability of funds and the usual
Commission on Audit (COA) to serve a term of seven years Memorandum directing the inventory committee to explain why accounting and auditing rules. Payment of the balance of said
expiring on January 26, 1987. Petitioner had discharged the no action should be filed against its members for failure to retirement benefits shall be subject to the final results of the
functions of Chairman of the COA in an acting capacity since complete a physical inventory and verification of all equipment; audit concerning your fiscal responsibility and/or accountability
1975. for exceeding their authority in recommending clearances for as former Chairman of this Commission.
petitioner and Chairman Guingona; and for recommending
On December 31, 1985, petitioner applied for clearance from all petitioner's clearance in total disregard of Section 102 of P.D. In a letter dated January 22, 1990, petitioner requested full
money, property and other accountabilities in preparation for his No. 1445 (Government Auditing Code of the Philippines). The payment of his retirement benefits.
retirement. He obtained the clearance applied for, which covered members of the committee were subsequently administratively
the period from 1976 to December 31, 1985. The clearance had charged. Petitioner was furnished a copy of the report of the special audit
all the required signatures and bore a certification that petitioner team in the letter dated December 21, 1989 of respondent
was "cleared from money, property and/or other accountabilities On January 2, 1988, respondent Chairman created a special Chairman on January 29, 1990, nearly a year after its
by this Commission" (Rollo, p. 44). audit team for the purpose of conducting a financial and completion. Attached to a copy of the report was a letter dated
compliance audit of the COA transactions and accounts during November 14, 1989 from respondent Chairman, who required
After the EDSA Revolution, petitioner submitted his courtesy the tenure of petitioner from 1976 to 1984 (COA Office Order petitioner to submit his comment within 30 days (Rollo, p. 153).
resignation to President Corazon C. Aquino. He relinquished his 88-10677; Rollo, pp. 66-67).
office to the newly appointed Chairman, now Executive Petitioner submitted a letter-complaint, wherein he cited certain
Secretary Teofisto Guingona, Jr. on March 10, 1986. That same On February 28, 1989, the special audit team submitted its defects in the manner the audit was conducted. He further
day, he applied for retirement effective immediately. report stating: (i) that the audit consisted of selective review of claimed that the re-audit was not authorized by law since it
post-audit transactions in the head offices and the State covered closed and settled accounts.
Petitioner sought a second clearance to cover the period from Accounting and Auditing Center; (ii) that the audit disclosed a
January 1, 1986 to March 9, 1986. All the signatures necessary number of deficiencies which adversely affected the financial Upon petitioner's request, he was furnished a set of documents
to complete the second clearance, except that of Chairman condition and operation of the COA, such as violations of which he needed to prepare his comment. He was likewise given
Guingona, were obtained. The second clearance embodies a executive orders, presidential decrees and related rules and another 30-days to submit it.
certificate that petitioner was "cleared from money, property regulations; and (iii) that there were some constraints in the
and/or accountability by this Commission" (Rollo, p. 49). audit, such as the unavailability of records and documents, and A series of correspondence between petitioner and respondent
Chairman Guingona, however, failed to take any action thereon. personnel movements and turnover. While the report did not Chairman ensued. On September 10, 1990, petitioner requested
make any recommendation, it instead mentioned several a copy of the working papers on which the audit report was
Chairman Guingona was replaced by respondent Chairman. A officials and employees, including petitioner, who may be based. This was denied by respondent Chairman, who claimed
year later, respondent Chairman issued COA Office Order No. responsible or accountable for the questioned transactions that under the State Audit Manual, access to the working paper
87-10182 (Rollo, p. 50), which created a committee to inventory (Rollo, pp. 73, 147-151). was restricted. Petitioner's reconsideration was likewise denied

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and he was given a non-extendible period of five days to submit general authority granted in Section 624 of the Administrative
his comment. Whatever infirmities or limitations existed in said clearances Code, antagonism between the two provisions is avoided (Hunt
were cured after respondent Chairman favorably indorsed v. Hernandez, 64 Phil. 753 [1937]).
Instead of submitting his comment, petitioner sought several petitioner's application for retirement to the Government Service
clarifications and specification, and requested for 90 days within Insurance System and recommended its approval to take effect Under Section 4 of R.A. No. 1568 (An Act to Provide Life
which to submit his comment, considering that the report on March 10, 1986. In said endorsement, respondent Chairman Pension to the Auditor General and the Chairman or Any
covered a ten-year period of post-audited transactions. Ignoring made it clear that there were no pending administrative and Member of the Commission of Elections), the benefits granted
petitioner's request, respondent Chairman demanded an criminal cases against petitioner (Rollo, p. 52). by said law to the Auditor General and the Chairman and
accounting of funds and a turn over of the assets of the Fiscal Members of the Commission on Elections shall not be subject to
Administration Foundation, Inc. within 30 days. Regardless of petitioner's monetary liability to the government garnishment, levy or execution. Likewise, under Section 33 of
that may be discovered from the audit concerning his fiscal P.D. No. 1146, as amended (The Revised Government Service
II responsibility as former COA Chairman, respondent Chairman Insurance Act of 1977), the benefits granted thereunder "shall
cannot withhold the benefits due petitioner under the retirement not be subject, among others, to attachment, garnishment, levy
Petitioner then filed the instant petition. As prayed for by laws. or other processes."
petitioner, this Court issued a temporary restraining order on
January 17, 1991. In Romana Cruz v. Hon. Francisco Tantuico, 166 SCRA 670 Well-settled is the rule that retirement laws are liberally
(1988), the National Treasurer withheld the retirement benefits interpreted in favor of the retiree because the intention is to
Petitioner argues that notwithstanding the two clearances of an employee because of his finding that she negligently provide for the retiree's sustenance and comfort, when he is no
previously issued, and respondent Chairman's certification that allowed the anomalous encashment of falsified treasury longer capable of earning his livelihood (Profeta vs. Drilon, 216
petitioner had been cleared of money and property warrants. SCRA 777 [1992]).
accountability, respondent Chairman still refuses to release the
remaining half of his retirement benefits — a purely ministerial In said case, where petitioner herein was one of the respondents, Petitioner also wants us to enjoin the re-audit of his fiscal
act. we found that the employee had been cleared by the National responsibility or accountability, invoking the following grounds:
Treasurer from all money and property responsibility, and held
Petitioner was already issued an initial clearance during his that the retirement pay accruing to a public officer may not be 1. The re-audit involved settled and closed accounts
tenure, effective December 31, 1985 (Rollo, p. 44). All the withheld and applied to his indebtedness to the government. which under Section 52 of the Audit Code can no longer be re-
required signatures were present "is cleared from money, opened and reviewed;
property and/or accountabilities by this commission" with the In Tantuico, we cited Justice Laurel's essay on the rationale for
following notation: the benign ruling in favor of the retired employees, thus: 2. The re-audit was initiated by respondent Chairman
alone, and not by the Commission as a collegial body;
No property accountability under the Chairman's name as the . . . Pension in this case is a bounty flowing from the
person. Final clearance as COA Chairman subject to the graciousness of the Government intended to reward past 3. The report of the special audit team that recommended
completion of ongoing reconciliation of Accounting & services and, at the same time, to provide the pensioner with the the re-audit is faulty as the team members themselves admitted
P(roperty) records and to complete turnover of COA property means with which to support himself and his family. Unless several constraints in conducting the re-audit, e.g. unavailability
assigned to him as agency head. otherwise clearly provided, the pension should inure wholly to of the documents, frequent turn-over and movement of
the benefit of the pensioner. It is true that the withholding and personnel, etc.;
xxx xxx xxx application of the amount involved was had under Section 624
of the Administrative Code and not by any judicial process, but 4. The re-audit covered transactions done even after
The responsibility of the Chairman for the disbursement and if the gratuity could not be attached or levied upon execution in petitioner's retirement;
collection accounts of this Commission for CYs Sept. '75 to view of the prohibition of Section 3 of Act No. 4051, the
Aug. '85, were completely post-audited, however as of Dec. 31, appropriation thereof by administrative action, if allowed, would 5. He was not given prior notice of the re-audit;
1985, the suspensions and disallowances in the amounts of lead to the same prohibited result and enable the respondent to
P36,196,962.11 and P28,762.36 respectively are still in the do indirectly what they can not do directly under Section 3 of 6. He was not given access to the working papers; and
process of settlement (Rollo, pp. 44-45). the Act No. 4051. Act No. 4051 is a later statute having been
approved on February 21, 1933, whereas the Administrative 7. Respondents were barred by res judicata from
Petitioner also applied for a second clearance to cover the period Code of 1917 which embodies Section 624 relied upon by the proceeding with the re-audit (Rollo, pp. 19-40).
from January 1 to March 9, 1986, which application had been respondents was approved on March 10 of that year.
signed by all the officials, except the Chairman (Rollo, p. 49). Considering Section 3 of Act No. 4051 as an exception to the

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The petition must fail insofar as it seeks to abort the completion would have been due to the retiree during the remaining years of
of the Are the benefits provided for under Social Security System his life were he still employed;
re-audit. While at the beginning petitioner raised objections to Resolution No. 56 to be considered simply as financial
the manner the audit was conducted and the authority of assistance for retiring employees, or does such scheme WHEREAS, the life annuity under R.A. 660, as amended, being
respondents to re-open the same, he subsequently cooperated constitute a supplementary retirement plan proscribed by closer to the monthly income that was lost on account of old age
with the examination of his accounts and transactions as a COA Republic Act No. 4968? than the gratuity under R.A. 1616, as amended, would best serve
official. the interest of the retiree;
The foregoing question is addressed by this Court in resolving
With respect to the legal objections raised by petitioner to the the instant petition for certiorari which seeks to reverse and set WHEREAS, it is the policy of the Social Security Commission
partial findings of the respondents with respect to his aside Decision No. 94-126[1]dated March 15, 1994 of to promote and to protect the interest of all SSS employees, with
accountability, such findings are still tentative. As petitioner has respondent Commission on Audit, which denied petitioners a view to providing for their well-being during both their
requested, he is entitled to a reasonable time within which to request for reconsideration of its adverse ruling disapproving working and retirement years;
submit his comment thereon. claims for financial assistance under SSS Resolution No. 56.
WHEREAS, the availment of life annuities built up by
But in order to prepare his comment, petitioner should be given The Facts premiums paid on behalf of SSS employees during their
access to the working papers used by the special audit team. The working years would mean more savings to the SSS;
audit report covered a period of ten years (1976-1985) and Petitioners Avelina B. Conte and Leticia Boiser-Palma were
involved numerous transactions. It would be unfair to expect former employees of the Social Security System (SSS) who WHEREAS, it is a duty of the Social Security Commission to
petitioner to comment on the COA's findings of the report retired from government service on May 9, 1990 and September effect savings in every possible way for economical and
without giving him a chance to verify how those findings were 13, 1992, respectively. They availed of compulsory retirement efficient operations;
arrived at. benefits under Republic Act No. 660.[2]
WHEREAS, it is the right of every SSS employee to choose
It has been seven years since petitioner's retirement. Since then In addition to retirement benefits provided under R.A. 660, freely and voluntarily the benefit he is entitled to solely for his
he was only paid half of his retirement benefits, with the other petitioners also claimed SSS financial assistance benefits own benefit and for the benefit of his family;
half being withheld despite the issuance of two clearances and granted under SSS Resolution No. 56, series of 1971.
the approval of his retirement application. As of the filing of this NOW, THEREFORE, BE IT RESOLVED, That all the SSS
petition on December 21, 1990, no criminal or administrative A brief historical backgrounder is in order. SSS Resolution No. employees who are simultaneously qualified for compulsory
charge had been filed against petitioner in connection with his 56,[3] approved on January 21, 1971, provides financial retirement at age 65 or for optional retirement at a lower age be
position as former Acting Chairman and Chairman of the COA. incentive and inducement to SSS employees qualified to retire encouraged to avail for themselves the life annuity under R.A.
to avail of retirement benefits under RA 660 as amended, rather 660, as amended;
WHEREFORE, the petition is GRANTED insofar as it seeks to than the retirement benefits under RA 1616 as amended, by
compel respondent Chairman of the COA to pay petitioner's giving them financial assistance equivalent in amount to the RESOLVED, FURTHER, That SSS employees who availed
retirement benefits in full and his monthly pensions beginning in difference between what a retiree would have received under themselves of the said life annuity, in appreciation and
March 1991. RA 1616, less what he was entitled to under RA 660. The said recognition of their long and faithful service, be granted
SSS Resolution No. 56 states: financial assistance equivalent to the gratuity plus return of
The petition is DENIED insofar as it seeks to nullify COA contributions under R.A. 1616, as amended, less the five year
Office Order No. 88-10677 and the audit report dated February RESOLUTION NO. 56 guaranteed annuity under R.A. 660, as amended;
28, 1989 but petitioner should be given full access to the
working papers to enable him to prepare his comment to any WHEREAS, the retirement benefits of SSS employees are RESOLVED, FINALLY, That the Administrator be authorized
adverse findings in said report. The temporary restraining order provided for under Republic Acts 660 and 1616 as amended; to act on all applications for retirement submitted by SSS
is LIFTED. employees and subject to availability of funds, pay the
WHEREAS, SSS employees who are qualified for compulsory corresponding benefits in addition to the money value of all
SO ORDERED. retirement at age 65 or for optional retirement at a lower age are accumulated leaves. (underscoring supplied)
entitled to either the life annuity under R.A. 660, as amended, or
[G.R. No. 116422. November 4, 1996] the gratuity under R.A. 1616, as amended; Long after the promulgation of SSS Resolution No. 56,
AVELINA B. CONTE and LETICIA BOISER-PALMA, respondent Commission on Audit (COA) issued a ruling,
petitioners, vs. COMMISSION ON AUDIT (COA), WHEREAS, a retirement benefit to be effective must be a captioned as 3rd Indorsement dated July 10, 1989,[4]
respondent. periodic income as close as possible to the monthly income that

02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 9 | 20

disallowing in audit all such claims for financial assistance inoperative or abolished; Provided, That the rights of those who well-qualified personnel to pursue a career in the government
under SSS Resolution No. 56, for the reason that: -- are already eligible to retire thereunder shall not be affected. service, rather than in the private sector or in foreign
(underscoring supplied) countries ...
x x x the scheme of financial assistance authorized by the SSS is
similar to those separate retirement plan or incentive/separation On January 12, 1993, herein petitioners filed with respondent A more developmental view of the financial institutions grant of
pay plans adopted by other government corporate agencies COA their letter-appeal/protest[8] seeking reconsideration of certain forms of financial assistance to its personnel, we believe,
which results in the increase of benefits beyond what is allowed COAs ruling of July 10, 1989 disallowing claims for financial would enable government administrators to see these financial
under existing retirement laws. In this regard, attention x x x is assistance under Res. 56. forms of remuneration as contributory to the national
invited to the view expressed by the Secretary of Budget and developmental efforts for effective and efficient administration
Management dated February 17, 1988 to the COA General On November 15, 1993, petitioner Conte sought payment from of the personnel programs in different institutions.[11]
Counsel against the proliferation of retirement plans which, in SSS of the benefits under Res. 56. On December 9, 1993, SSS
COA Decision No. 591 dated August 31, 1988, was concurred Administrator Renato C. Valencia denied[9] the request in The Courts Ruling
in by this Commission. x x x. consonance with the previous disallowance by respondent COA,
but assured petitioner that should the COA change its position, Petitioners contentions are not supported by law. We hold that
Accordingly, all such claims for financial assistance under SSS the SSS will resume the grant of benefits under said Res. 56. Res. 56 constitutes a supplementary retirement plan.
Resolution No. 56 dated January 21, 1971 should be disallowed
in audit. (underscoring supplied) On March 15, 1994, respondent COA rendered its COA A cursory examination of the preambular clauses and provisions
Decision No. 94-126 denying petitioners request for of Res. 56 provides a number of clear indications that its
Despite the aforequoted ruling of respondent COA, then SSS reconsideration. financial assistance plan constitutes a supplemental
Administrator Jose L. Cuisia, Jr. nevertheless wrote[5] on retirement/pension benefits plan. In particular, the fifth
February 12, 1990 then Executive Secretary Catalino Macaraig, Thus this petition for certiorari under Rule 65 of the Rules of preambular clause which provides that it is the policy of the
Jr., seeking presidential authority for SSS to continue Court. Social Security Commission to promote and to protect the
implementing its Resolution No. 56 dated January 21, 1971 interest of all SSS employees, with a view to providing for their
granting financial assistance to its qualified retiring employees. The Issues well-being during both their working and retirement years, and
the wording of the resolution itself which states Resolved,
However, in a letter-reply dated May 28, 1990,[6] then The issues[10] submitted by petitioners may be simplified and further, that SSS employees who availed themselves of the said
Executive Secretary Macaraig advised Administrator Cuisia that re-stated thus: Did public respondent abuse its discretion when it life annuity (under RA 660), in appreciation and recognition of
the Office of the President is not inclined to favorably act on the disallowed in audit petitioners claims for benefits under SSS their long and faithful service, be granted financial assistance x
herein request, let alone overrule the disallowance by COA of Res. 56? x x can only be interpreted to mean that the benefit being
such claims, because, aside from the fact that decisions, order or granted is none other than a kind of amelioration to enable the
actions of the COA in the exercise of its audit functions are Petitioners argue that the financial assistance under Res. 56 is retiring employee to enjoy (or survive) his retirement years and
appealable to the Supreme Court[7] pursuant to Sec. 50 of PD not a retirement plan prohibited by RA 4968, and that Res. 56 a reward for his loyalty and service. Moreover, it is plain to see
1445, the benefits under said Res. 56, though referred to as provides benefits different from and aside from what a retiring that the grant of said financial assistance is inextricably linked
financial assistance, constituted additional retirement benefits, SSS employee would be entitled to under RA 660. Petitioners with and inseparable from the application for and approval of
and the scheme partook of the nature of a supplementary contend that it is a social amelioration and economic upliftment retirement benefits under RA 660, i.e., that availment of said
pension/retirement plan proscribed by law. measure undertaken not only for the benefit of the SSS but more financial assistance under Res. 56 may not be done
so for the welfare of its qualified retiring employees. As such, it independently of but only in conjunction with the availment of
The law referred to above is RA 4968 (The Teves Retirement should be interpreted in a manner that would give the x x x most retirement benefits under RA 660, and that the former is in
Law), which took effect June 17, 1967 and amended CA 186 advantage to the recipient -- the retiring employees whose augmentation or supplementation of the latter benefits.
(otherwise known as the Government Service Insurance Act, or dedicated, loyal, lengthy and faithful service to the agency of
the GSIS Charter), making Sec. 28 (b) of the latter act read as government is recognized and amply rewarded -- the rationale Likewise, then SSS Administrator Cuisias historical overview of
follows: for the financial assistance plan. Petitioners reiterate the the origins and purpose of Res. 56 is very instructive and sheds
argument in their letter dated January 12, 1993 to COA that: much light on the controversy:[12]
(b) Hereafter, no insurance or retirement plan for officers or
employees shall be created by employer. All supplementary Motivation can be in the form of financial assistance, during Resolution No. 56, x x x, applies where a retiring SSS employee
retirement or pension plans heretofore in force in any their stay in the service or upon retirement, as in the SSS is qualified to claim under either RA 660 (pension benefit, that
government office, agency or instrumentality or corporation Financial Assistance Plan. This is so, because Government has is, 5 year lump sum pension and after 5 years, life time pension),
owned or controlled by the government, are hereby declared to have some attractive remuneration programs to encourage or RA 1616 (gratuity benefit plus return of contribution), at his

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option. The benefits under RA 660 are entirely payable by GSIS That the Res. 56 package is labelled financial assistance does with respect to what rules and regulations may be promulgated
while those under RA 1616 are entirely shouldered by SSS not change its essential nature. Retirement benefits are, after all, by such a body, as well as with respect to what fields are subject
except the return of contribution by GSIS. a form of reward for an employees loyalty and service to the to regulation by it. It may not make rules and regulations which
employer, and are intended to help the employee enjoy the are inconsistent with the provisions of the Constitution or a
Resolution No. 56 came about upon observation that qualified remaining years of his life, lessening the burden of worrying statute, particularly the statute it is administering or which
SSS employees have invariably opted to retire under RA 1616 about his financial support or upkeep.[13] On the other hand, a created it, or which are in derogation of, or defeat, the purpose
instead of RA 660 because the total benefit under the former is pension partakes of the nature of retained wages of the retiree of a statute.[17] Though well-settled is the rule that retirement
much greater than the 5-year lump sum under the latter. As a for a dual purpose: to entice competent people to enter the laws are liberally interpreted in favor of the retiree,[18]
consequence, the SSS usually ended up virtually paying the government service, and to permit them to retire from the nevertheless, there is really nothing to interpret in either RA
entire retirement benefit, instead of GSIS which is the main service with relative security, not only for those who have 4968 or Res. 56, and correspondingly, the absence of any doubt
insurance carrier for government employees. Hence, the retained their vigor, but more so for those who have been as to the ultra-vires nature and illegality of the disputed
situation has become so expensive for SSS that a study of the incapacitated by illness or accident.[14] resolution constrains us to rule against petitioners.
problem became inevitable.
Is SSS Resolution No. 56 then within the ambit of and thus As a necessary consequence of the invalidity of Res. 56, we can
As a result of the study and upon the recommendation of its proscribed by Sec. 28 (b) of CA 186 as amended by RA 4968? hardly impute abuse of discretion of any sort to respondent
Actuary, the SSS Management recommended to the Social Commission for denying petitioners request for reconsideration
Security Commission that retiring employees who are qualified We answer in the affirmative. Said Sec. 28 (b) as amended by of the 3rd Indorsement of July 10, 1989. On the contrary, we
to claim under either RA 660 or 1616 should be encouraged to RA 4968 in no uncertain terms bars the creation of any hold that public respondent in its assailed Decision acted with
avail for themselves the life annuity under RA 660, as amended, insurance or retirement plan -- other than the GSIS -- for circumspection in denying petitioners claim. It reasoned thus:
with the SSS providing a financial assistance equivalent to the government officers and employees, in order to prevent the
difference between the benefit under RA 1616 (gratuity plus undue and inequitous proliferation of such plans. It is beyond After a careful evaluation of the facts herein obtaining, this
return of contribution) and the 5-year lump sum pension under cavil that Res. 56 contravenes the said provision of law and is Commission finds the instant request to be devoid of merit. It
RA 660. therefore invalid, void and of no effect. To ignore this and rule bears stress that the financial assistance contemplated under SSS
otherwise would be tantamount to permitting every other Resolution No. 56 is granted to SSS employees who opt to retire
The Social Security Commission, as the policy-making body of government office or agency to put up its own supplementary under R.A. No. 660. In fact, by the aggrieved parties own
the SSS approved the recommendation in line with its mandate retirement benefit plan under the guise of such financial admission (page 2 of the request for reconsideration dated
to insure the efficient, honest and economical administration of assistance. January 12, 1993), it is a financial assistance granted by the SSS
the provisions and purposes of this Act. (Section 3 (c) of the management to its employees, in addition to the retirement
Social Security Law). We are not unmindful of the laudable purposes for promulgating benefits under Republic Act No. 660. (underscoring supplied for
Res. 56, and the positive results it must have had, not only in emphasis) There is therefore no question, that the said financial
Necessarily, the situation was reversed with qualified SSS reducing costs and expenses on the part of the SSS in assistance partakes of the nature of a retirement benefit that has
employees opting to retire under RA No. 660 or RA 1146 connection with the pay-out of retirement benefits and the effect of modifying existing retirement laws particularly
instead of RA 1616, resulting in substantial savings for the SSS gratuities, but also in improving the quality of life for scores of R.A. No. 660.
despite its having to pay financial assistance. retirees. But it is simply beyond dispute that the SSS had no
authority to maintain and implement such retirement plan, Petitioners also asseverate that the scheme of financial
Until Resolution No. 56 was questioned by COA. (underscoring particularly in the face of the statutory prohibition. The SSS assistance under Res. 56 may be likened to the monetary
part of original text; italics ours) cannot, in the guise of rule-making, legislate or amend laws or benefits of government officials and employees who are paid,
worse, render them nugatory. over and above their salaries and allowances as provided by
Although such financial assistance package may have been statute, an additional honorarium in varying amounts. We find
instituted for noble, altruistic purposes as well as from self- It is doctrinal that in case of conflict between a statute and an this comparison baseless and misplaced. As clarified by the
interest and a desire to cut costs on the part of the SSS, administrative order, the former must prevail.[15] A rule or Solicitor General:[19]
nevertheless, it is beyond any dispute that such package regulation must conform to and be consistent with the
effectively constitutes a supplementary retirement plan. The fact provisions of the enabling statute in order for such rule or Petitioners comparison of SSS Resolution No. 56 with the
that it was designed to equalize the benefits receivable from RA regulation to be valid.[16] The rule-making power of a public honoraria given to government officials and employees of the
1616 with those payable under RA 660 and make the latter administrative body is a delegated legislative power, which it National Prosecution Service of the Department of Justice,
program more attractive, merely confirms the foregoing finding. may not use either to abridge the authority given it by the Office of the Government Corporate Counsel and even in the
Congress or the Constitution or to enlarge its power beyond the Office of the Solicitor General is devoid of any basis. The
scope intended. Constitutional and statutory provisions control monetary benefits or honoraria given to these officials or

02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 11 | 20

employees are categorized as travelling and/or representation additional retirement benefits, on account of a bureaucratic boo- CAEDO, ROMEO C. QUILATAN, ESPERANZA
expenses which are incurred by them in the course of handling boo improvidently hatched by their higher-ups. It is clear to our FALLORINA, LOLITA BACANI, ARNULFO
cases, attending court/administrative hearings, or performing mind that petitioners applied for benefits under RA 660 only MADRIAGA, LEOCADIA S. FAJARDO, BENIGNO
other field work. These monetary benefits are given upon because of the incentives offered by Res. 56, and that absent BULAONG, SHIRLEY D. FLORENTINO, and LEA M.
rendition of service while the financial benefits under SSS such incentives, they would have without fail availed of RA MENDIOLA,
Resolution No. 56 are given upon retirement from service. 1616 instead. We likewise have no doubt that petitioners are Petitioners,
simply innocent bystanders in this whole bureaucratic rule- - versus -
In a last-ditch attempt to convince this Court that their position making/financial scheme-making drama, and that therefore, to COMMISSION ON AUDIT (COA), AMORSONIA B.
is tenable, petitioners invoke equity. They believe that they are the extent possible, petitioners ought not be penalized or made ESCARDA, MA. CRISTINA D. DIMAGIBA, and
deserving of justice and equity in their quest for financial to suffer as a result of the subsequently determined invalidity of REYNALDO P. VENTURA,
assistance under SSS Resolution No. 56, not so much because Res. 56, the promulgation and implementation of which they Respondents.
the SSS is one of the very few stable agencies of government had nothing to do with. G. R. No. 162372
where no doubt this recognition and reputation is earned x x x Promulgated:
but more so due to the miserable scale of compensation granted And here is where equity may properly be invoked: since SSS October 19, 2011
to employees in various agencies to include those obtaining in employees who are qualified for compulsory retirement at age
the SSS.[20] 65 or for optional retirement at a lower age are entitled to either This is a petition for review on certiorari under Rule 64 in
the life annuity under R.A. 660, as amended, or the gratuity relation to Rule 65 of the 1997 Rules of Court to annul and set
We must admit we sympathize with petitioners in their financial under R.A. 1616, as amended,[22] it appears that petitioners, aside the Commission on Audits Decision Nos. 2003-062 and
predicament as a result of their misplaced decision to avail of being qualified to avail of benefits under RA 660, may also 2004-004 dated March 18, 2003 and January 27, 2004,
retirement benefits under RA 660, with the false expectation that readily qualify under RA 1616. It would therefore not be respectively, for having been made without or in excess of
financial assistance under the disputed Res. 56 will also misplaced to enjoin the SSS to render all possible assistance to jurisdiction, or with grave abuse of discretion amounting to lack
materialize. Nevertheless, this Court has always held that equity, petitioners for the prompt processing and approval of their or excess of jurisdiction.
which has been aptly described as justice outside legality, is applications under RA 1616, and in the meantime, unless barred
applied only in the absence of, and never against, statutory law by existing regulations, to advance to petitioners the difference
or judicial rules of procedure.[21] In this case, equity cannot be between the amounts due under RA 1616, and the amounts they The Government Service Insurance System (GSIS) is joined by
applied to give validity and effect to Res. 56, which directly already obtained, if any, under RA 660. its Board of Trustees and officials, namely: Chairman
contravenes the clear mandate of the provisions of RA 4968. Hermogenes D. Concepcion, Jr.; Vice-Chairman and President
WHEREFORE, the petition is hereby DISMISSED for lack of and General Manager Winston F. Garcia (Garcia); Executive
Likewise, we cannot but be aware that the clear imbalance merit, there having been no grave abuse of discretion on the part Vice President and Chief Operating Officer Reynaldo P.
between the benefits available under RA 660 and those under of respondent Commission. The assailed Decision of public Palmiery; Trustees Leovigildo P. Arrellano, Elmer T. Bautista,
RA 1616 has created an unfair situation for it has shifted the respondent is AFFIRMED, and SSS Resolution No. 56 is hereby Leonora V. de Jesus, Fulgencio S. Factoran, Florino O. Ibaez,
burden of paying such benefits from the GSIS (the main declared ILLEGAL, VOID AND OF NO EFFECT. The SSS is and Aida C. Nocete; Senior Vice Presidents Aurora Mathay,
insurance carrier of government employees) to the SSS. Without hereby urged to assist petitioners and facilitate their applications Enriqueta Disuangco, Amalio Mallari, Lourdes Patag, and
the corrective effects of Res. 56, all retiring SSS employees under RA 1616, and to advance to them, unless barred by Asuncion C. Sindac; Vice Presidents Richard Martinez, Romeo
without exception will be impelled to avail of benefits under RA existing regulations, the corresponding amounts representing the C. Quilatan, and Gloria D. Caedo; and Managers Esperanza
1616. The cumulative effect of such availments on the financial difference between the two benefits programs. No costs. Fallorina, Lolita Bacani, Arnulfo Madriaga, Leocadia S.
standing and stability of the SSS is better left to actuarians. But Fajardo, Benigno Bulaong, Shirley D. Florentino, and Lea M.
the solution or remedy for such situation can be provided only SO ORDERED. Mendiola, together with all other officials and employees held
by Congress. Judicial hands cannot, on the pretext of showing liable by the Commission on Audit (COA) as petitioners in this
concern for the welfare of government employees, bestow case.[1]
GOVERNMENT SERVICE INSURANCE SYSTEM The respondents in this petition are: the COA; its Director of
equity contrary to the clear provisions of law. (GSIS), HERMOGENES D. CONCEPCION, JR., Corporate Audit Office (CAO) I, Amorsonia B. Escarda
WINSTON F. GARCIA, REYNALDO P. PALMIERY, (Escarda), who rendered CAO I Decision No. 2002-009 dated
Nevertheless, insofar as herein petitioners are concerned, this LEOVIGILDO P. ARRELLANO, ELMER T. BAUTISTA,
Court cannot just sit back and watch as these two erstwhile May 27, 2002; the former Corporate Auditor of GSIS, Ma.
LEONORA V. DE JESUS, FULGENCIO S. FACTORAN, Cristina D. Dimagiba (Dimagiba), who issued the Notices of
government employees, who after spending the best parts of FLORINO O. IBAEZ, AIDA C. NOCETE, AURORA P.
their lives in public service have retired hoping to enjoy their Disallowance subject of CAO I Decision No. 2002-009; and the
MATHAY, ENRIQUETA DISUANCO, AMALIO incumbent GSIS Corporate Auditor Reynaldo P. Ventura
remaining years, face a financially dismal if not distressed MALLARI, LOURDES PATAG, RICHARD M.
future, deprived of what should have been due them by way of (Ventura).[2]
MARTINEZ, ASUNCION C. SINDAC, GLORIA D.
02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 12 | 20
The facts are as follows: **Subject to review. Applicable only to present salary structure. EFFECTIVITY DATE: The Plan shall take effect August, 2000.
(Emphases supplied.)
On May 30, 1997, Republic Act No. 8291, otherwise known as IV IMPLEMENTING POLICIES:
The Government Service Insurance System Act of 1997 (the 1. To be entitled to the plan, the employee must be qualified
GSIS Act) was enacted and approved, amending Presidential to retire with 5 year lump sum under RA 660 or RA 8291 or had On November 21, 2000, Board Resolution No. 326 was
Decree No. 1146, as amended, expanding and increasing the previously retired under applicable retirement laws amended by Board Resolution No. 360,[7] which provided for a
coverage and benefits of the GSIS, and instituting reforms single rate for all positions, regardless of salary grade, in the
therein. 2. The loyalty incentive benefit shall be computed based on computation of creditable service, viz:
both total government service and highest monthly
On October 17, 2000, pursuant to the powers granted to it under salary/benefit received from GSIS 1-20 years x 1.5
Section 41(n) of the said law, the GSIS Board of Trustees, upon 21-30 years x 2.0
the recommendation of the Management-Employee Relations 3. Employees with pending administrative and/or criminal 31 years above x 2.5
Committee (MERCOM), approved Board Resolution No. 326 case may apply but processing and payment of loyalty incentive
wherein they adopted the GSIS Employees Loyalty Incentive shall be held in abeyance until final decision on their cases
Plan (ELIP),[3] to wit: Except as herein amended, Resolution No. 326 dated October
17, 2000 shall remain to have full force and effect.
4. GSIS loyalty incentive plan can only be availed once and
GSIS EMPLOYEES LOYALTY INCENTIVE PLAN employees who retired under GERSIP97 are no longer qualified
(Pursuant to Sec. 41(n) of R.A. No. 8291)
Dimagiba, the corporate auditor of GSIS, communicated to the
5. There shall be no refund of retirement premiums in all President and General Manager of GSIS that the GSIS RFP was
I OBJECTIVE : To motivate and reward employees for cases
meritorious, faithful and satisfactory service contrary to law. However, the GSIS Legal Services Group
opined that the GSIS Board was legally authorized to adopt the
6. Application is subject to approval by the President and plan since Section 28(b) of Commonwealth Act No. 186 as
II COVERAGE : The GSIS Employees Loyalty Incentive Plan General Manager amended by Republic Act No. 4968 has been repealed by
shall cover all present permanent employees and members of the Sections 3 and 41(n) of Republic Act No. 8291.[8]
Board and those who may hereafter be appointed.
PROCEDURE:
On January 16, 2001, Board Resolution No. 6[9] was approved,
1. Employees availing of the Employee Loyalty Incentive wherein ELIP was renamed GSIS Retirement/Financial Plan
III SPECIFIC BENEFIT : LI = TGS* MULTIPLIED BY HS Plan must file his/her application under RA 660[4] or RA 8291 (RFP) to conform strictly to the wordings of Section 41(n) of
MINUS 5yLS/BPRCP for the five (5) year lump sum, with HRS for indorsement to Republic Act No. 8291.
SIG
Where : LI = loyalty incentive Upon Garcias assumption of office as President and General
TGS = total government service 2. Option 2 under RA 8291 may be allowed but the loyalty Manager, Dimagiba requested to again review the GSIS RFP.
HS = highest monthly salary/benefit received incentive shall be computed based on 5 year lump sum This was denied by Garcia.[10] Believing that the GSIS RFP
5yLS = 5 year lump sum under RA 660, RA 910, PD 1146 or was morally indefensible,[11] Dimagiba sought the assistance of
RA 8291 COA in determining the legality and/or morality of the said Plan
BPRCP = retirement benefit previously received plus cash 3. The loyalty incentive shall only be paid after deducting the in so far as it has adopted the best features of the two retirement
payment for employees no longer qualified to 5yLS lump sum under RA 660, RA 910,[5] PD 1146[6] or RA 8291 schemes, the 5-year lump sum payment under [Republic Act
or retirement benefit previously received plus cash payment No.] 1616 and the monthly pension of [Republic Act No.] 660
*Determined as follows: based on the creditable service computed at 150%.[12]
**For positions salary grade 1-26 For positions SG 27 up 4. Government service of previously retired employees shall
be considered in computing the loyalty incentive On August 7, 2001, COAs General Counsel Santos M.
1 - 20 yrs x 1.5 1 - 20 yrs x 1.25 Alquizalas (Alquizalas) issued a Memorandum to COA
21 - 30 yrs x 2.0 21 - 30 yrs x 1.75 5. For expediency, the processing of the plan shall be done Commissioner Raul C. Flores regarding the GSIS RFP.
31 yrs above x 2.5 31 yrs above x 2.00 by the Social Insurance Group Alquizalas opined that the GSIS RFP is a supplementary

02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 13 | 20

retirement plan, which is prohibited under Republic Act No. Without responding to Garcias August 27, 2001 Memorandum, claimed, the availees of the plan were employees whose
4968, or the Teves Retirement Law. He also said that since there Dimagiba issued the following Notices of Disallowance on the supposed monthly pensions under the GSIS RFP included
is no provision in the new Republic Act No. 8291 expressly grounds that: services they had already earned in other government agencies.
repealing the Teves Retirement Law, the two laws must be Thus, Escarda held that the GSIS RFP was in reality a
harmonized absent an irreconcilable inconsistency. Alquizalas Pursuant to legal opinion of the General Counsel dated August supplementary retirement plan for these GSIS employees.
pronounced that Board Resolution Nos. 360 and 6 are null and 7, 2001, Board Resolution No. 360 dated Nov. 21, 2000 as Finally, Escarda disagreed with GSISs assertion that the Teves
void for being violative of Section 28(b) of Commonwealth Act amended by No. 6 dated Jan. 16, 2001 approving the Employees Retirement Law had been modified or repealed as the repealing
No. 186 as amended by Republic Act No. 4968, which bars the Loyalty Incentive Plan (ELIP) is null and void for being directly clause in Republic Act No. 8291 is a general repealing clause,
creation of a supplemental retirement scheme; and Section 41(n) in conflict with Section 28(b) of CA No. 186 as amended by RA which is frowned upon and is generally not effective to repeal a
of Republic Act No. 8291, which speaks of an early retirement 4968 which bars the creation of supplemental retirement scheme specific law like the Teves Retirement Law.[32]
plan or financial assistance.[13] and of Section 41 (n) of RA 8291 which speaks of an early
retirement plan or financial assistance.[19] Undaunted, the petitioners filed before the COA a Petition for
On August 14, 2001,[14] Commissioner Flores forwarded this Review[33] of CAO Is decision, raising the exact same issues it
Memorandum to Dimagiba, who in turn forwarded it to Garcia [xxx] raised in its Memorandum of Appeal dated February 14, 2002,
on August 23, 2001. Dimagiba, in her letter attached to to wit:
Alquizalass Memorandum, added that for lack of legal basis, her On January 30, 2002, GSIS, together with some of the I
office was disallowing in audit the portion of retirement benefits petitioners herein, gave notice[25] to the COA CAO I that it was
granted under the GSIS RFP, or the excess of the benefits due appealing the 21 Notices of Disallowance it had received from Whether or not petitioners/appellants GSIS and GSIS Board of
the retirees. She also said that GSIS could avail of the appeal Dimagiba on various dates. It amended[26] this Notice of Trustees have the power and authority to design and adopt the
process provided for under Sections 48 to 50 of Presidential Appeal the following day, to include all GSIS officials and questioned GSIS Retirement Financial Plan.
Decree No. 1445 and Section 37.1 of the Manual on Certificate employees held liable and accountable under the said
of Settlement and Balances.[15] disallowances.[27]
II
On August 27, 2001, Garcia responded[16]to Dimagiba, taking In their Memorandum of Appeal,[28] the petitioners mainly
exception to the notice of disallowance for being highly argued that GSIS had the power, under its charter, to adopt and Whether or not petitioners/appellant GSIS officials who are
irregular and precipitate as it was based on a mere opinion of implement the GSIS RFP. They alleged that their plan was not merely implementing the GSIS Act of 1997 and duly adopted
COAs counsel who had no authority to declare the resolution of unique to GSIS as other government agencies also have their Board Resolutions must be held responsible and accountable for
the GSIS Board of Trustees as null and void. Moreover, Garcia own retirement or financial assistance plans. They claimed that the implementation of the GSIS Retirement Financial Plan.
asseverated that COA had neither power nor authority to declare to then disallow their retirement plan would be tantamount to a
as null and void certain resolutions approved by the Board of violation of their constitutional right to be equally protected by III
Government Corporations, as the power to do so was our laws.[29] The petitioners also argued that Republic Act No.
exclusively lodged before the courts. He also argued that the 8291 had modified or repealed all provisions of the Teves Whether or not the adoption of the GSIS Retirement Financial
notice of disallowance was premature, and was tantamount to a Retirement Law that were inconsistent with it and that GSISs Plan violated Section 28 (b) of CA No. 186 as amended by
pre-audit activity, as it should refer only to a particular or officials could not be held liable or accountable for Republic Act No. 4968, and Section 41(n) of Republic Act No.
specific disbursement of public funds and not against a general implementing the GSIS RFP since this was done in the 8291, otherwise known as the GSIS Act of 1997.
activity or transaction. Garcia averred that the GSIS RFP was performance of their duties.[30]
part and parcel of the compensation package that GSIS may
IV
provide for its personnel, by virtue of the powers granted to its On May 27, 2002, the COA, through Escarda, in CAO I
Board of Trustees under Section 41(m) and (n) of Republic Act Decision No. 2002-009,[31] affirmed the disallowances made
No. 8291. Garcia said that the appeal process would commence Whether or not the COA disallowance of the GSIS Retirement
by Dimagiba. Escarda sustained the COA general counsels
only upon GSISs receipt of the particulars of the disallowances. Financial Plan is lawful, and the CAO I Decision No. 2002-009
opinion and said that while the GSIS may have the power to
[17] Finally, Garcia requested Dimagiba to withdraw the notices and the Notices of Disallowance issued by GSIS Corporate
adopt an early retirement or a financial assistance plan under its
of disallowance in the interest of industrial peace in the GSIS. Auditor Dimagiba are proper.[34]
charter, it cannot supplement a retirement plan already existing
[18] under the law. Escarda said that the purpose of an early
retirement plan is generally to streamline the organization by On March 18, 2003, COA issued Decision No. 2003-062,[35]
encouraging those who would not be qualified for compulsory wherein the issue was narrowed down to whether or not the
retirement to retire early under the plan. However, Escarda GSIS Board can reward themselves with unusually large

02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 14 | 20

benefits in the face of an unusually large actuarial deficit which while its general counsels opinion boosted its position, such was Republic Act No. 8291, otherwise known as the GSIS Act of
will result in the denial of benefits of future retirees in other not the basis of the disallowance.[42] 1997.
government agencies for whom the fund is principally intended.
[36] The petitioners sought reconsideration[43] of this decision and
even asked to be heard in oral arguments,[44] but COA, in its IV
COA zeroed in on the fact that to be entitled to the GSIS RFP, Decision No. 2004-004 dated January 27, 2004,[45] denied both
the employee must be qualified to retire with 5-year lump sum motions and affirmed its Decision No. 2003-062 dated March
under R.A. No. 660 or R.A. No. 8291 or [must have] previously 18, 2003 with finality. Respondent[s] disallowed the GSIS Retirement Financial Plan
retired under the applicable retirement laws.[37] They affirmed (RFP), and erroneously affirmed the Notices of Disallowance
Escardas ruling and contended that what the still valid[38] issued by then GSIS Corporate Auditor Dimagiba.
The petitioners are now before us, asking us to nullify COAs
Teves Retirement Law permits is the creation of an early March 18, 2003 and January 27, 2004 decisions, on the ground
retirement or financial assistance plan, and the above that they were made with grave abuse of discretion amounting to V
requirement imposed under the GSIS RFP does not apply to lack or excess of jurisdiction.[46]
either plans. COA added: Respondents touched on new and irrelevant matters which were
The petitioners posit the following arguments to support their not raised in the disallowances and/or pleadings below, and
Unmistakably, the Plan being a supplementary cause: which were never validated.[47]
pension/retirement plan, it contravenes the Teves law. Not even
the renaming of [the] Employees Loyalty Incentive Plan (ELIP) The crux of the present case boils down to the legality of Board
to Retirement Financial Plan (RFP), purportedly to conform RESPONDENTS ACTED WITHOUT OR IN EXCESS OF
JURISDICTION, OR WITH GRAVE ABUSE OF Resolution Nos. 360, 326, and 6, which we shall refer to simply
with the wording of the law, could conceal its true nature or as the GSIS RFP, in light of Republic Act No. 8291 or the GSIS
character as a supplementary pension/retirement plan which DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION, WHEN IN THE FOLLOWING MANNER: Act of 1997, and Commonwealth Act No. 186 or the
incorporates the best features of R.A. Nos. 660 and 8291, Government Service Insurance Act as amended by Republic Act
creating in effect a third retirement plan for GSIS personnel No. 4968 (the Teves Retirement Law).
only. This is all the more made manifest by the fact that even I Below are the pertinent provisions of the foregoing laws:
Board members who are not qualified at all to retire under any
existing retirement laws could retire under the RFP. Strikingly, Respondents sought to interpret clear provisions of Republic
by promulgating another regular retirement scheme, the GSIS Act No. 8291, otherwise known as the GSIS Act of 1997, and
Board enlarged the field of its authority and regulation as declare null and void duly adopted resolutions of petitioner Republic Act No. 8291
provided in the statute it is supposed to administer.[39] GSIS which has the power and authority to design and adopt the
questioned GSIS Retirement Financial Plan (RFP). SECTION 41. Powers and Functions of the GSIS. The GSIS
COA said that the power of GSIS in applying the law must not shall exercise the following powers and functions:
be abused. COA averred that GSIS was found to be deficient II
actuarially by Fifteen Billion Pesos, and for it to reward its xxxx
employees, who were already enjoying salaries higher than their
Respondents ruled that petitioners GSIS officials who are
counterparts in other government agencies, meant that it would (n) to design and adopt an Early Retirement Incentive Plan
merely implementing the GSIS Act of 1997 and duly adopted
have to dip into its principal fund to the prejudice of its (ERIP) and/or financial assistance for the purpose of retirement
Board Resolutions could be held responsible and accountable
members, who were the very raison detre for its establishment. for its own personnel; x x x.
for the implementation of the GSIS Retirement Financial Plan
[40]
(RFP).

Addressing petitioners claim of discrimination, COA said that

each of the government agencies that had adopted its own Commonwealth Act No. 186 as amended by the Teves
retirement plans did so pursuant to a valid law and under factual III Retirement Law:
circumstances that were not present in the case of GSIS. COA
also affirmed the liability of the petitioners who were held Respondents held that the adoption of the GSIS Retirement SEC. 28. Miscellaneous Provisions x x x
accountable under the disallowances as they had failed to Financial Plan (RFP) violated Section 28 (b) of CA No. 186, as
exercise the diligence of a good father of a family in the amended by Republic Act No. 4968, and Section 41(n) of (b) Hereafter no insurance or retirement plan for officers or
performance of their functions.[41] Finally, COA averred that employees shall be created by any employer. All supplementary
02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 15 | 20
retirement or pension plans heretofore in force in any subject. Such repeals are not favored for a law cannot be incentive plan and such early retirement incentive plan or
government office, agency, or instrumentality or corporation deemed repealed unless it is clearly manifest that the legislature financial assistance must be for the purpose of retirement.
owned or controlled by the government, are hereby declared so intended it. x x x.[55]
inoperative or abolished. x x x. [48] According to Websters Third New International Dictionary,
early means occurring before the expected or usual time, while
This Court sees no incompatibility between the two laws being incentive means serving to encourage, rouse, or move to action,
Republic Act No. 4968 or the discussed here. In reconciling Section 41(n) of Republic Act No. or something that constitutes a motive or spur.[58]
Teves Retirement Law 8291 with the Teves Retirement Law, we are guided by this
Is Still Good Law Courts pronouncement in Philippine International Trading It is clear from the foregoing that Section 41(n) of Republic Act
Corporation v. Commission on Audit[56]: No. 8291 contemplates a situation wherein GSIS, due to a
The petitioners insist that under Section 3 of Republic Act No. reorganization, a streamlining of its organization, or some other
8291, which provides that all laws or any law or parts of law In reconciling Section 6 of Executive Order No. 756 with circumstance, which calls for the termination of some of its
specifically inconsistent herewith are hereby repealed or Section 28, Subsection (b) of Commonwealth Act No. 186, as employees, must design a plan to encourage, induce, or motivate
modified accordingly, all provisions of the Teves Retirement amended, uppermost in the mind of the Court is the fact that the these employees, who are not yet qualified for either optional or
Law that are inconsistent with Republic Act No. 8291 are best method of interpretation is that which makes laws compulsory retirement under our laws, to instead voluntarily
deemed repealed or modified.[49] consistent with other laws which are to be harmonized rather retire. This is the very reason why under the law, the retirement
than having one considered repealed in favor of the other. Time plan to be adopted is in reality an incentive scheme to encourage
and again, it has been held that every statute must be so the employees to retire before their retirement age.
We do not subscribe to petitioners interpretation of this law.
This is because, unless the intention to revoke is clear and interpreted and brought in accord with other laws as to form a
manifest, the abrogation or repeal of a law cannot be assumed. uniform system of jurisprudence interpretere et concordare The above interpretation applies equally to the phrase financial
[50] The repealing clause contained in Republic Act No. 8291 is legibus est optimus interpretendi. Thus, if diverse statutes relate assistance, which, contrary to the petitioners assertion, should
not an express repealing clause because it fails to identify or to the same thing, they ought to be taken into consideration in not be read independently of the purpose of an early retirement
designate the statutes that are intended to be repealed. It is construing any one of them, as it is an established rule of law incentive plan. Under the doctrine of noscitur a sociis, the
actually a clause, which predicated the intended repeal upon the that all acts in pari materia are to be taken together, as if they construction of a particular word or phrase, which is in itself
condition that a substantial conflict must be found in existing were one law. x x x.[57] ambiguous, or is equally susceptible of various meanings, may
and prior laws.[51] be made clear and specific by considering the company of words
While Republic Act No. 8291 speaks of an early retirement in which it is found or with which it is associated. In other
incentive plan or financial assistance for the GSIS employees, words, the obscurity or doubt of the word or phrase may be
Since Republic Act No. 8291 made no express repeal or reviewed by reference to associated words.[59] Thus, the phrase
abrogation of the provisions of Commonwealth Act No. 186 as Commonwealth Act No. 186 as amended by the Teves
Retirement Law talks about insurance or retirement plans other financial assistance, in light of the preceding words with which
amended by the Teves Retirement Law, the reliance of the it is associated, should also be construed as an incentive scheme
petitioners on its general repealing clause is erroneous. The than our existing retirement laws. In other words, what the
Teves Retirement Law contemplates and prohibits are separate to induce employees to retire early or as an assistance plan to be
failure to add a specific repealing clause in Republic Act No. given to employees retiring earlier than their retirement age.
8291 indicates that the intent was not to repeal any existing law, retirement or insurance plans. In fact, the very same provision
unless an irreconcilable inconsistency and repugnancy exists in declared inoperative or abolished all supplementary retirement
the terms of the new and old laws.[52] or pension plans. 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
We are likewise not convinced by petitioners claim of repeal by The GSIS Retirement/Financial retirement incentive plan, or a financial assistance plan, which
implication. It is a well-settled rule that to bring about an Plan is Null and Void involves a substantial amount that is given to motivate
implied repeal, the two laws must be absolutely incompatible employees to retire early. Instead, it falls exactly within the
and clearly repugnant that the later law cannot exist without purpose of a retirement benefit, which is a form of reward for an
nullifying the prior law.[53] As this Court held in Recaa, Jr. v. It is true that under Section 41(n) of Republic Act No. 8291,
GSIS is expressly granted the power to adopt a retirement plan employees loyalty and lengthy service,[61] in order to help him
Court of Appeals[54]: or her enjoy the remaining years of his life.
and/or financial assistance for its employees, but a closer look at
the provision readily shows that this power is not absolute. It is
Repeal of laws should be made clear and expressed. Repeals by qualified by the words early, incentive, and for the purpose of Furthermore, to be able to apply for the GSIS RFP, one must be
implication are not favored as laws are presumed to be passed retirement. The retirement plan must be an early retirement qualified to retire under Republic Act No. 660 or Republic Act
with deliberation and full knowledge of all laws existing on the No. 8291, or must have previously retired under our existing
02 OCTOBER 2017 LAW ON PUBLIC CORPORATION P a g e 16 | 20
retirement laws. This only means that the employees covered by approved and enacted after Conte is of no moment, as what was have been clothed with authority to adopt an early retirement or
the GSIS RFP were those who were already eligible to retire or interpreted in Conte was the provision in the Teves Retirement financial assistance plan, such authority was limited by the very
had already retired. Certainly, this is not included in the scope of Law in issue here. Moreover, we have already discussed above law it was seeking to implement.
an early retirement incentive plan or financial assistance for the how such provision has neither been repealed nor modified by
purpose of retirement. Section 41(n) of Republic Act No. 8291. Thus, it is just fitting Borrowing this Courts words in the Conte case, it is beyond
that we find guidance in the application and interpretation of cavil that [the GSIS Retirement/Financial Plan] contravenes
The fact that GSIS changed the name from Employees Loyalty Section 28(b) of Commonwealth Act No. 186, as amended by [Section 28(b) of C.A. No. 186 as amended by R.A. No. 4968 or
Incentive Plan to Retirement/Financial Plan does not change its Republic Act No. 4968, from the Conte case. the Teves Retirement Law], and is therefore invalid, void, and
essential nature. A perusal of the plan shows that its purpose is of no effect. To ignore this and rule otherwise would be
not to encourage GSISs employees to retire before their As we have held in that case: tantamount to permitting every other government office or
retirement age, but to augment the retirement benefits they agency to put up its own supplementary retirement benefit plan
would receive under our present laws. [62] Without a doubt, the under the guise of such financial assistance.[70]
GSIS RFP is a supplementary retirement plan, which is
prohibited by the Teves Retirement Law. 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 Another compelling reason to nullify the GSIS RFP is that it
retirement plan other than the GSIS for government officers and allows, and in fact mandates, the inclusion of the years in
Conte v. Commission on Audit[63] squarely applies in this case. employees, in order to prevent the undue and inequitous government service of previously retired employees, to wit:
In that case, the Social Security System (SSS) issued Resolution proliferation of such plans. x x x.[65] PROCEDURE:
No. 56, which provided financial incentive and inducement to
SSS employees who were qualified to retire, to avail of xxxx
retirement benefits under Republic Act No. 660, as amended
(which GSIS would have to pay), rather than the retirement The petitioners asseverate that many laws such as Republic Act
benefits under Republic Act No. 1616, as amended (which SSS Nos. 8291, 1161, 8282, 6683, and 7641, were validly enacted 4. Government service of previously retired employees shall be
would have to pay). Under SSS Resolution No. 56, those who after the Teves Retirement Law; thus, the evil that it seeks to considered in computing the loyalty incentive.[71]
retire under Republic Act No. 660 would be given a financial avoid is the proliferation of those retirement plans that are not so
assistance equivalent in amount to the difference between what authorized by law.[66] The petitioners even go so far as
a retiree would have received under Republic Act No. 1616, less comparing themselves to other government agencies, which In Santos v. Court of Appeals,[72] we affirmed the Court of
what he was entitled to under Republic Act No. 660. COA have adopted their own retirement schemes at one time or Appeals and the Civil Service Commissions ruling that for the
disallowed in audit all claims for financial assistance under SSS another such as the Development Bank of the Philippines, the purpose of computing or determining Santos separation pay, his
Resolution No. 56 for being similar to those separate retirement Securities and Exchange Commission, the National Power years of service in his previous government office should be
plans or incentive/separation pay plans adopted by other Corporation, the COA, the Court of Appeals, and even this excluded and his separation pay should be solely confined to his
government corporate agencies, which resulted in the increase Court.[67] services in his new government position. We gave the rationale
of benefits beyond what was allowed under existing retirement for this as follows:
laws. This Court sustained COAs disallowance and held that The petitioners themselves admit that those retirement schemes
SSS Resolution No. 56 constituted a supplementary retirement were adopted as a [one-time] grant [by] reason of Such would run counter to the policy of this Court against
plan proscribed by Section 28(b) of Commonwealth Act No. reorganization[68] pursuant to Republic Act No. 6683[69] or the double compensation for exactly the same services. More
186, as amended by Republic Act No. 4968. [64] Early Retirement Law. As for the additional benefits extended to important, it would be in violation of the first paragraph of
retiring justices or commissioners, suffice it to say that they Section 8 of Article IX-B of the Constitution, which proscribes
The petitioners argue that Conte finds no application in this were also given pursuant to laws passed by Congress. Moreover, additional, double, or indirect compensation. Said provision
case, since SSS had no authority under its charter to adopt such those retirement plans enjoy the presumption of validity and reads:
a resolution, unlike the GSIS, which was cloaked with authority regularity.
to issue the questioned resolutions. Furthermore, petitioners
No elective or appointive public officer or employee shall
argue that Republic Act No. 8291 became effective in 1997, In stark contrast, the GSIS RFP was not created because of a receive additional, double, or indirect compensation, unless
which was after this Court had already decided the Conte case. valid company reorganization. Its purpose did not include the specifically authorized by law .[73]
granting of benefits for early retirement. Neither did it provide
We find no merit in the petitioners arguments. The laws have benefits for either voluntary or involuntary separation from
not changed, and the doctrine in Conte has not been overturned GSIS. It was intended for employees who were already eligible
or abandoned. The fact that Republic Act No. 8291 was to retire under existing retirement laws. While the GSIS may

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Our ruling therein is likewise applicable in this case. To credit As for Dimagiba, while she may have relied on the opinion of This Court agrees that only the payees should be held liable for
the years of service of GSIS retirees in their previous COAs legal counsel to support the disallowances she had made, the return of the disallowed amounts under the GSIS RFP.
government office into the computation of their retirement it is worthy to note that she had already informed Garcia of the
benefits under the GSIS RFP, notwithstanding the fact that they GSIS RFPs illegality even before she sought COAs opinion on Although it is true that as early as December 2000,[78]
had received or had been receiving the retirement benefits under the matter. Moreover, neither Dimagibas nor COAs confidence Dimagiba already questioned the legality of the GSIS RFP, it
the applicable retirement law they retired in, would be to in the opinion of COAs general counsel could be faulted, as was only in August 2001 when GSIS received COAs opinion on
countenance double compensation for exactly the same services. under Presidential Decree No. 1445, or the Government the matter. Moreover, COA first decided the issue only in 2002.
[74] 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: While the Board of Trustees believed they had the authority and
To emphasize COAs distaste[75] for the huge retirement power to adopt the GSIS RFP, the officers on the other hand
benefits of GSISs board members, officers, and employees, who believed that they were implementing a valid resolution. As we
are already receiving significantly higher salaries than their SECTION 11. The Legal Office. The Legal Office shall be said in Buscaino v. Commission on Audit,[79] the resolution of
counterparts in other government agencies, COA illustrated the charged with the following responsibilities: the Board of Trustees was sufficient basis for the disbursement,
glaring discrepancy between what a GSIS employee would get and it is beyond these officers competence to pass upon the
under the GSIS RFP, and what a mere GSIS member would get (1) Perform advisory and consultative functions and render validity of such board resolutions.[80]
under applicable retirement laws: legal services with respect to the performance of the functions of
the Commission and the interpretation of pertinent laws and On account of the GSIS RFPs doubtful validity, the petitioners
auditing rules and regulations; x x x. should have exercised prudence and held in abeyance the
[xxx]
disbursement of the portion of retirement benefits under the
With the above illustration, it can be readily seen and GSIS RFP until the issue of its legality had been resolved.
understood why the Teves Retirement Law prohibits the In view of the above, we can hardly impute grave abuse of
proliferation of additional retirement plans in our government discretion amounting to lack or excess of jurisdiction on the part However, the Board of Trustees and the officers held
offices. While it is true that a better compensation package will of respondents COA, Escarda, and Dimagiba, for disallowing in accountable under the Notices of Disallowance should not be
not only attract more competent and capable individuals to work audit the portion of retirement benefits in excess of what is held liable as they are entitled to the presumption of having
in GSIS, but will also ensure that they remain loyal and faithful allowed under our existing retirement laws. On the contrary, exercised their functions with regularity and in good faith.
therein, this has already been addressed by the GSIS employees they acted with caution, diligence, and vigilance in the exercise
exemption from Republic Act No. 678 or the Salary of their duties, especially since what was involved were huge WHEREFORE, the petition is PARTIALLY GRANTED. The
Standardization Law (SSL), under Sec. 43(d) of Republic Act amounts of money imbued with public interest, since GSISs assailed Decisions of the Commission on Audit Nos. 2003-062
No. 8291. As shown in the above tables, the salary of a GSIS funds come from the contributions of its members. Thus, GSISs and 2004-004 dated March 18, 2003 and January 27, 2004, are
employee is much higher compared to his counterpart in another business is to keep in trust the money belonging to its members, AFFIRMED with the MODIFICATION that only the payees of
government agency. This remains to be true even with the recent [77] who are not limited to its own employees. the disbursements made under the GSIS RFP in the Notices of
increase of the salaries in the SSL. Disallowance are liable for such disbursements. Board
The Payees are Liable for the Resolution Nos. 326, 360, and 6 are declared ILLEGAL, VOID,
The petitioners also question COAs authority to nullify the Return of the Disallowed Benefits and OF NO EFFECT.
resolutions involved in this case. It must be remembered that Under the GSIS RFP SO ORDERED.
none of the COA decisions nullified the Board Resolutions
adopted by GSISs Board of Trustees. What the COA decisions G.R. No. 146824 November 21, 2007
affirmed were the disallowances made by GSISs own Corporate ENCARNACION E. SANTIAGO, petitioner,
The petitioners claim that GSISs Board of Trustees cannot be
Auditor, Dimagiba. It is irrelevant that COA, in its decisions, vs.
held liable as they were acting pursuant to a valid law when they
touched upon issues not brought before it, or that it referred to COMMISSION ON AUDIT and THE DIRECTOR OF THE
adopted the GSIS RFP. The petitioners also argue that the
its general counsels opinion on the GSIS RFP, as these were COMMISSION ON AUDIT, REGIONAL OFFICE NO. V,
implementation of the GSIS RFP was merely ministerial, thus
done only to reinforce COAs position. They have no bearing respondents.
the GSIS officers held accountable under the Notices of
upon the weight of COAs decisions, which are based upon our
Disallowance should not be held responsible and accountable
existing laws and jurisprudence. On September 13, 2007, petitioner filed a motion for
for the allocation and release of the benefits under the GSIS
RFP. clarification of the dispositive portion of the Decision in this

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case which was promulgated on June 15, 2006. The dispositive The term "emolument" includes salary, fees, compensation, The State Auditors' finding of cash shortage against petitioner
portion reads: perquisites, pensions and retirement benefits. — Philippine municipal treasurer, which has not been satisfactorily disputed,
Constitutional Association Inc. v. Gimenez, 122 Phil. 904. is prima facie evidence against her. The prima facie evidence
WHEREFORE, the petition is PARTLY GRANTED in that suffices for the withholding of petitioner's salary, in order to
respondent COA is authorized merely to withhold petitioner's In petitioner's special civil action for certiorari, she prayed that safeguard the interest of the Government.
salary but not to apply it to the alleged shortage for which her judgment be issued setting aside the Director's First Indorsement
liability is still being litigated. No costs. dated January 25, 2000, the Commission's Letters dated However, it must be stated that although State Auditor del
December 8, 2000 and January 22, 2001, the Second Rosario properly directed the Municipal Mayor of Goa,
SO ORDERED. Indorsement dated December 8, 2000; and that the respondents, Camarines Sur to withhold petitioner's salary and other
including the Municipal Mayor of Goa, Camarines Sur, be emoluments, she incorrectly directed that the same be applied or
Petitioner informed the Court that upon the directive of the ordered to immediately pay her salary in the accumulated set off against petitioner's cash shortage. As ruled in Villanueva,
Bureau of Local Government Finance Executive Director Ma. amount of P124,606.21, and the salary accruing after the month before set-off can take place under Section 624 of the Revised
Presentacion R. Montesa, she is back to her regular station and of July 1999 to which she may be entitled.1 Administrative Code of 1919, as amended, now Section 21 of
formally assumed office as the Municipal Treasurer of Goa, the Administrative Code of 1987, a person's indebtedness to the
Camarines Sur, on February 26, 2007. The Court took cognizance of the petition insofar as it raised government must be one that is admitted by him or pronounced
this question of law: by final judgment of a competent court. In this case, the
In a letter dated August 13, 2007, petitioner requested indebtedness was not admitted by petitioner and a competent
respondents and the Municipal Mayor of Goa, Camarines Sur, to Can the salary of a government employee be ordered withheld, court has not yet pronounced final judgment thereon.
pay her representation allowance, additional compensation retained and applied to the payment of public funds [in the
allowance, productivity bonus, year-end bonus, clothing amount of P3,580,378.80] allegedly embezzled under the As a result, the amount of petitioner's salary remitted to the local
allowance and other benefits, excluding her salary, from employee's care on the basis of an audit report and the filing of government treasurer as payment of petitioner's cash shortage
October 1998 up to the present based on the dispositive portion an administrative case and a criminal case for malversation of should be considered merely withheld until final resolution on
of the Decision. public funds? her indebtedness. In the event that petitioner is found not liable
for the cash shortage, the withheld salary and other emoluments
In a letter dated August 22, 2007, respondent Commission on Stated otherwise, may State Auditor del Rosario direct that the will be released to her; otherwise, it will be applied in payment
Audit (COA), through the Regional Cluster Director, replied salary and other emoluments of petitioner be withheld and of her indebtedness.
that the items requested cannot be paid to petitioner because this applied to her cash shortage determined merely in an audit
Court has already clarified the issue when it stated in the body examination?2 WHEREFORE, the petition is PARTLY GRANTED in that
of the Decision that ". . . COA can direct the proper officer to respondent COA is authorized merely to withhold petitioner's
withhold petitioner's salary and other emoluments. . . ." The Court held: salary but not to apply it to the alleged shortage for which her
According to COA, "emoluments" necessarily include all liability is still being litigated. No costs.
allowances and any money due petitioner. Regarding the propriety of withholding the petitioner's salary,
the Court holds that COA can direct the proper officer to SO ORDERED.3
Petitioner prays that the dispositive portion of the Decision be withhold petitioner's salary and other emoluments under Section
clarified as to whether the emoluments due her as Municipal 21, Chapter 4, Subtitle B, Book V of the Administrative Code of The issue, as stated in the Decision, clearly shows that the Court
Treasurer are excluded from the item that respondents can 1987, which is substantially the same as Section 37 of PD No. considered for resolution whether or not the salary and other
withhold, so that in the event that the said emoluments are 1445, the legal basis of COA. . . . emoluments of petitioner may be withheld by respondents and
excluded, the same can be paid to her. applied to her cash shortage determined merely in an audit
xxx examination.
The Philippine Law Dictionary, third edition, by Federico B.
Moreno, defines "emolument" as: It is noted that the directive of State Auditor Del Rosario to the In the body of the Decision, the Court held that "[r]egarding the
Municipal Mayor of Goa, Camarines Sur to withhold the salary propriety of withholding the petitioner's salary, the Court holds
Fees, fixed salary, and compensation which the incumbent of an of petitioner is in accordance with the COA Guidelines to the that COA can direct the proper officer to withhold petitioner's
office is by law entitled to receive because he holds such office Examiner/Auditor in case of a cash shortage contained in salary and other emoluments under Section 21, Chapter 4,
or performed some service required of the occupant thereof. Chapter 3 of the COA Handbook on Cash Examination . . . . Subtitle B, Book V of the Administrative Code of 1987, which
is substantially the same as Section 37 of PD No. 1445, the legal
xxx basis of COA. . . ."4

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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.

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