EN
BANC
AVELINA
B. CONTE and LETICIA BOISER-PALMA,
Petitioners,
G. R. No. 116422
November 4, 1996
-versus-
COMMISSION
ON AUDIT [COA],
Respondent.
D
E C I S I O N
PANGANIBAN, J.:
Are the
benefits provided for under Social Security
System Resolution No. 56 to be considered simply as "financial
assistance"
for retiring employees, or does such scheme constitute a supplementary
retirement plan proscribed by Republic Act No. 4968?
The foregoing
question is addressed by this Court
in resolving the instant petition for certiorari which seeks to reverse
and set aside Decision No. 94-126[1]
dated March 15, 1994 of respondent Commission on Audit, which denied
petitioners'
request for reconsideration of its adverse ruling disapproving claims
for
financial assistance under SSS Resolution No. 56.
The Facts
Petitioners
Avelina B. Conte and Leticia Boiser-Palma
were former employees of the Social Security System [SSS] who retired
from
government service on May 9, 1990 and September 13, 1992, respectively.
They availed of compulsory retirement benefits under Republic Act No.
660.[2]
In addition to retirement benefits provided
under
R. A. 660, petitioners also claimed SSS "financial assistance" benefits
granted under SSS Resolution No. 56, Series of 1971.cralaw:red
A brief
historical backgrounder is in order. SSS
Resolution No. 56,[3]
approved on January 21, 1971, provides financial incentives and
inducement
to SSS employees qualified to retire to avail of retirement benefits
under
R. A. 660 as amended, rather than the retirement benefits under R. A.
1616
as amended, by giving them "financial assistance" equivalent in amount
to the difference between what a retiree would have received under R.
A.
1616, less what he was entitled to under R. A. 660. The said SSS
Resolution
No. 56 states:
RESOLUTION NO. 56
WHEREAS, the retirement benefits
of
SSS
employees are provided for under Republic Acts 660 and 1616 as amended;.
WHEREAS, SSS employees who
are
qualified
for compulsory retirement at age 65 or for optional retirement at a
lower
age are entitled to either the life annuity under R. A. 660, as
amended,
or the gratuity under R. A. 1616, as amended;
WHEREAS, a retirement benefit
to be
effective
must be a periodic income as close as possible to the monthly income
that
would have been due to the retiree during the remaining years of his
life
were he still employed;
WHEREAS, the life annuity
under R.
A. 660,
as amended, being closer to the monthly income that was lost on account
of old age than the gratuity under R. A. 1616, as amended, would best
serve
the interest of the retiree;
WHEREAS, it is the policy of
the
Social
Security Commission to promote and to protect the interest of all SSS
employees,
with a view to providing for their well-being during both their working
and retirement years;
WHEREAS, the availment of
life
annuities
built up by premiums paid on behalf of SSS employees during their
working
years would mean more savings to the SSS;
WHEREAS, it is a duty of the
Social
Security
Commission to effect savings in every possible way for economical and
efficient
operations;
WHEREAS, it is the right of
every
SSS employee
to choose freely and voluntarily the benefit he is entitled to solely
for
his own benefit and for the benefit of his family;
NOW, THEREFORE, BE IT RESOLVED,
That all
the SSS employees who are simultaneously qualified for compulsory
retirement
at age 65 or for optional retirement at a lower age be encouraged to
avail
for themselves the life annuity under R. A. 660, as amended;
RESOLVED, FURTHER, That SSS
employees who
availed
themselves of the said life annuity, in appreciation and recognition of
their long and faithful service, be granted financial assistance
equivalent
to the gratuity plus return of contributions under R. A. 1616, as
amended,
less the five year guaranteed annuity under R. A. 660, as amended;
RESOLVED, FINALLY, That the
Administrator
be authorized to act on all applications for retirement submitted by
SSS
employees and subject to availability of funds, pay the corresponding
benefits
in addition to the money value of all accumulated leaves. [Emphasis
supplied].
Long after the
promulgation of SSS Resolution No.
56, respondent Commission on Audit [COA] issued a ruling captioned as
"3rd
Indorsement" dated July 10, 1989,[4]
disallowing in audit "all such claims for financial assistance under
SSS
Resolution No. 56" for the reason that:
The scheme of financial assistance
authorized
by the SSS is similar to those separate retirement plan or
incentive/separation
pay plans adopted by other government corporate agencies which results
in the increase of benefits beyond what is allowed under existing
retirement
laws. In this regard, attention is invited to the view expressed by the
Secretary of Budget and Management dated February 17, 1988 to the COA
General
Counsel against the proliferation of retirement plans which, in COA
Decision
No. 591 dated August 31, 1988, was concurred in by this Commission
Accordingly,
all such claims for financial assistance
under SSS Resolution No. 56 dated January 21, 1971 should be disallowed
in audit. [Emphasis supplied].
Despite the
afore-quoted ruling of respondent
COA, then SSS Administrator Jose L. Cuisia, Jr. nevertheless wrote[5]
on February 12, 1990 then Executive Secretary Catalino Macaraig, Jr.,
seeking
"presidential authority for SSS to continue implementing its Resolution
No. 56 dated January 21, 1971 granting financial assistance to its
qualified
retiring employees".cralaw:red
However, in a
letter-reply dated May 28, 1990,[6]
then Executive Secretary Macaraig advised Administrator Cuisia that the
Office of the President "is not inclined to favorably act on the herein
request, let alone over-rule the disallowance by COA" of such claims,
because,
aside from the fact that decisions, order or actions of the COA in the
exercise of its audit functions are appealable to the Supreme Court[7]
pursuant to Sec. 50 of P. D. 1445, the benefits under said Res. 56,
though
referred to as "financial assistance", constituted additional
retirement
benefits and the scheme partook of the nature of a supplementary
pension/retirement
plan proscribed by law.cralaw:red
The law referred
to above is R. A. 4968 [The Teves
Retirement Law] which took effect on June 17, 1967 and amended CA 186
[otherwise
known as the Government Service Insurance Act, or the GSIS Charter]
making
Sec. 28 [b] of the latter act read as follows:
[b] Hereafter, no insurance or retirement
plan
for officers or employees shall be created by employer. All
supplementary
retirement or pension plans heretofore in force in any government
office.
agency or instrumentality or corporation owned or controlled by the
government,
are hereby declared in operative or abolished; Provided, That the
rights
of those who are already eligible to retire there under shall not be
affected." [Emphasis supplied].
On January 12,
1993, herein petitioners filed with
respondent COA their "letter-appeal/protest"[8]
seeking reconsideration of COA's ruling of July 10, 1989 disallowing
claims
for financial assistance under Res. 56.
On November 15,
1993, petitioner Conte sought
payment from SSS of the benefits under Res. 56. On December 9, 1993,
SSS
Administrator Renato C. Valencia denied[9]
the request in consonance with the previous disallowance by respondent
COA, but assured petitioner that should the COA change its position,
the
SSS will resume the grant of benefits under said Res. 56.cralaw:red
On March 15,
1994, respondent COA rendered its
COA Decision No. 94-126 denying petitioners' request for
reconsideration.cralaw:red
Thus this
Petition for Certiorari under Rule 65
of the Rules of Court.
The Issues
The issues[10]
submitted by petitioners may be simplified and restated thus: Did
public
respondent abuse its discretion when it disallowed in audit
petitioners'
claims for benefits under SSS Res. 562?
Petitioners argue that the financial
assistance
under Res. 56 is not a retirement plan prohibited by R. A. 4968, and
that
Res. 56 provides benefits different from and "aside from" what a
retiring
SSS employee would be entitled to under R. A. 660. Petitioners contend
that it "is a social amelioration and economic upliftment measure
undertaken
not only for the benefit of the SSS but more so for the welfare of its
qualified retiring employees." As such, it "should be interpreted in a
manner that would give the.most advantage to the recipient
the retiring employees whose dedicated, loyal, lengthy and faithful
service
to the agency of government is recognized and amply rewarded the
rationale for the financial assistance plan." Petitioners reiterate the
argument in their letter dated January 12, 1993 to COA that:
Motivation can be
in the form of financial assistance,
during their stay in the service or upon retirement, as in the SSS
Financial
Assistance Plan. This is so, because Government has to have some
attractive
remuneration programs to encourage well-qualified personnel to pursue a
career in the government service, rather than in the private sector or
in foreign countries.cralaw:red
A more
developmental view of the financial institutions'
grant of certain forms of financial assistance to its personnel, we
believe,
would enable government administrators to see these financial forms of
remuneration as contributory to the national developmental efforts for
effective and efficient administration of the personnel programs in
different
institutions.[11]
The Court's Ruling
Petitioners'
contentions are not supported by
law. We hold that Res. 56 constitutes a supplementary retirement
plan.
A cursory examination of the preambular clauses and provisions of Res.
56 provides a number of clear indications that its financial assistance
plan constitutes a supplemental retirement/pension benefits plan. In
particular,
the fifth preambular clause which provides that "it is the policy of
the
Social Security Commission to promote and to protect the interest of
all
SSS employees, with a view to providing for their well-being during
both
their working and retirement years", and the wording of the resolution
itself which states "Resolved, further, that SSS employees who availed
themselves of the said life annuity [under R. A. 660], in appreciation
and recognition of their long and faithful service, be granted
financial
assistance can only be interpreted to mean that the benefit being
granted
is none other than a kind of amelioration to enable the retiring
employee
to enjoy (or survive) his retirement years and a reward for his loyalty
and service. Moreover, it is plain to see that the grant of said
financial
assistance is inextricably linked with and inseparable from the
approval
of retirement benefits under R. A. 660, i.e., that availment of
said financial assistance under Res. 56 may not be done independently
of
but only in conjunction with the availment of retirement benefits under
R. A. 660, and that the former is in augmentation or supplementation of
the latter benefits.cralaw:red
Likewise, then
SSS Administrator Cuisia's historical
overview of the origins and purpose of Res. 56 is very instructive and
sheds much light on the controversy:[12]
Resolution No. 56 applies where a
retiring SSS
employee is qualified to claim under either R. A. 660 [pension benefit,
that is, 5-year lump sum pension and after 5 years, lifetime pension],
or R. A. 1616 [gratuity benefit plus return of contribution], at his
option.
The benefits under R. A. 660 are entirely payable by GSIS while those
under
R. A. 1616 are entirely shouldered by SSS except the return of
contribution
by GSIS.
Resolution No.
56 came about upon the observation
that qualified SSS employees have invariably opted to retire under R.
A.
1616 instead of R. A. 660 because the total benefit under the former is
much greater than the 5-year lump sum under the latter. As a
consequence,
the SSS usually ended up virtually paying the entire retirement
benefit,
instead of GSIS which is the main insurance carrier for government
employees.
Hence, the situation has become so expensive for SSS that a study of
the
problem became inevitable.
As a result of
the study and upon the recommendation
of its Actuary, the SSS Management recommended to the Social Security
Commission
that retiring employees who are qualified to claim under either R. A.
660
or 1616 should be "encouraged" to avail for themselves the life annuity
under R. A. 660, as amended, with the SSS providing a "financial
assistance"
equivalent to the difference between the benefit under R. A. 1616
(gratuity
plus return of contribution) and the 5-year lump sum pension under R.
A.
660.cralaw:red
The Social
Security Commission, as the policy-making
body of the SSS, approved the recommendation in line with its mandate
to
"insure the efficient, honest and economical administration of the
provisions
and purposes of this Act. [Section 3 (c) of the Social Security
Law].
Necessarily, the situation was reversed with qualified SSS employees
opting
to retire under R. A. No. 660 or R. A. 1146 instead of R. A. 1616,
resulting
in substantial savings for the SSS despite its having to pay "financial
assistance".cralaw:red
Until Resolution
No. 56 was questioned by COA.
[Emphasis part of original text; emphasis ours].cralaw:red
Although such
financial assistance package may
have been instituted for noble, altruistic purposes as well as from
self-interest
and a desire to cut costs on the part of the SSS, nevertheless, it is
beyond
any dispute that such package effectively constitutes a supplementary
retirement
plan. The fact that it was designed to equalize the benefits receivable
from R. A. 1616 with those payable under R. A. 660 and make the latter
program more attractive, merely confirms the foregoing finding.cralaw:red
That the Res. 56
package is labelled "financial
assistance" does not change its essential nature. Retirement benefits
are,
after all, a form of reward for an employee's loyalty and service to
the
employer, and are intended to help the employee enjoy the remaining
years
of his life, lessening the burden of worrying about his financial
support
or upkeep.[13]
On the other hand, a pension partakes of the nature of "retained wages"
of the retiree for a dual purpose: to entice competent people to enter
the government service, and to permit them to retire from the service
with
relative security, not only for those who have retained their vigor,
but
more so for those who have been incapacitated by illness or accident.[14]
Is SSS Resolution
No. 56 then within the ambit
of and thus proscribed by Sec. 28 (b) of CA 186 as amended by R. A.
4968?
We answer in the
affirmative. Said Sec. 28 (b)
as amended by R. A. 4968 in no uncertain terms bars the creation of any
insurance or retirement plan other than the GSIS for
government
officers and employees, in order to prevent the undue and iniquitous
proliferation
of such plans. It is beyond cavil that Res. 56 contravenes the said
provision
of law and is therefore invalid, void and of no effect. No ignore this
and rule otherwise would be tantamount to permitting every other
government
office or agency to put up its own supplementary retirement benefit
plan
under the guise of such "financial assistance".cralaw:red
We are not
unmindful of the laudable purposes
for promulgating Res. 56, and the positive results it must have had,
not
only in reducing costs and expenses on the part of the SSS in
connection
with the pay-out of retirement benefits and gratuities, but also in
improving
the quality of life for scores of retirees. But it is simply beyond
dispute
that the SSS had no authority to maintain and implement such retirement
plan, particularly in the face of the statutory prohibition. The SSS
cannot,
in the guise of rule-making, legislate or amend laws or worse, render
them
nugatory.cralaw:red
It is doctrinal
that in case of conflict between
a statute and an administrative order, the former must prevail.[15]
A rule or regulation must conform to and be consistent with the
provisions
of the enabling statute in order for such rule or regulation to be
valid.[16]
The rule-making power of a public administrative body is a delegated
legislative
power, which it may not use either to abridge the authority given it by
the Congress or the Constitution or to enlarge its power beyond the
scope
intended. Constitutional and statutory provisions control with respect
to what rules and regulations may be promulgated by such a body, as
well
as with respect to what fields are subject to regulation by it. It may
not make rules and regulations which are inconsistent with the
provisions
of the Constitution or a statute, particularly the statute it is
administering
or which created it, or which are in derogation of, or defeat, the
purpose
of a statute.[17]
Though well-settled is the rule that retirement laws are liberally
interpreted
in favor of the retiree,[18]z
nevertheless, there is really nothing to interpret in either R. A. 4968
or Res. 56, and correspondingly, the absence of any doubt as to the
ultra-vires
nature and illegality of the disputed resolution constrains us to rule
against petitioners.cralaw:red
As a necessary
consequence of the invalidity of
Res. 56, we can hardly impute abuse of discretion of any sort to
respondent
Commission for denying petitioners' request for reconsideration of the
3rd Indorsement of July 10, 1989. On the contrary, we hold that public
respondent in its assailed Decision acted with circumspection in
denying
petitioners claim. It reasoned thus:
After a careful evaluation of the facts
herein
obtaining, this Commission finds the instant request to be devoid of
merit.
It bears stress that the financial assistance contemplated under SSS
Resolution
No. 56 is granted to SSS employees who opt to retire under R. A. No.
660.
In fact, by the aggrieved parties' own admission [page 2 of the request
for reconsideration dated January 12, 1993], it is a financial
assistance
granted by the SSS management to its employees. in addition to the
retirement
benefits under Republic Act. No. 660." [underscoring supplied for
emphasis].
There is, therefore, no question, that the said financial assistance
partakes
of the nature of a retirement benefit that has the effect of modifying
existing retirement laws particularly R. A. No. 660.
Petitioners
also asseverate that the scheme of financial
assistance under Res. 56 may be likened to the monetary benefits of
government
officials and employees who are paid, over and above their salaries and
allowances as provided by statute, an additional honorarium in varying
amounts. We find this comparison baseless and misplaced. As clarified
by
the Solicitor General:[19]
Petitioners'
comparison of SSS Resolution No.
56 with the "honoraria" given to government officials and employees of
the "National Prosecution Service of the Department of Justice", Office
of the Government Corporate Counsel and even in the "Office of the
Solicitor
General" is devoid of any basis. The monetary benefits or "honoraria"
given
to these officials or employees are categorized as travelling and/or
representation
expenses which are incurred by them in the course of handling cases,
attending
court/administrative hearings, or performing other field work. These
monetary
benefits are given upon rendition of service while the "financial
benefits"
under SSS Resolution No. 56 are given upon retirement from service.cralaw:red
In a last-ditch
attempt to convince this Court
that their position is tenable, petitioners invoke equity. They
"believe
that they are deserving of justice and equity in their quest for
financial
assistance under SSS Resolution No. 56, not so much because the SSS is
one of the very few stable agencies of government where no doubt this
recognition
and reputation is earned but more so due to the miserable scale of
compensation
granted to employees in various agencies to include those obtaining in
the SSS."[20]
We must admit We
sympathize with petitioners in
their financial predicament as a result of their misplaced decision to
avail of retirement benefits under R. A. 660, with the false
expectation
that "financial assistance" under the disputed Res. 56 will also
materialize.
Nevertheless, this Court has always held that equity, which has been
aptly
described as "justice outside legality," is applied only in the absence
of, and never against, statutory law or judicial rules of procedure.[21]
In this case, equity cannot be applied to give validity and effect to
Res.
56, which directly contravenes the clear mandate of the provisions of
R.
A. 4968.cralaw:red
Likewise, We
cannot but be aware that the clear
imbalance between the benefits available under R. A. 660 and those
under
R. A. 1616 has created an unfair situation for it has shifted the
burden
of paying such benefits from the GSIS [the main insurance carrier of
government
employees] to the SSS. Without the corrective effects of Res. 56, all
retiring
SSS employees without exception will be impelled to avail of benefits
under
R. A. 1616. The cumulative effect of such availments on the financial
standing
and stability of the SSS is better left to actuarians. But the solution
or remedy for such situation can be provided only by Congress. Judicial
hands cannot, on the pretext of showing concern for the welfare of
government
employees, bestow equity contrary to the clear provisions of law.cralaw:red
Nevertheless,
insofar as herein petitioners are
concerned, this Court cannot just sit back and watch as these two
erstwhile
government employees, who after spending the best parts of their lives
in public service have retired hoping to enjoy their remaining years,
face
a financially dismal if not distressed future, deprived of what should
have been due them by way of additional retirement benefits, on account
of a bureaucratic boo-boo improvidently hatched by their higher-ups. It
is clear to our mind that petitioners applied for benefits under R. A.
660 only because of the incentives offered by Res. 56, and that absent
such incentives, they would have without fall availed of R. A. 1616
instead.
We likewise have no doubt that petitioners are simply innocent
bystanders
in this whole bureaucratic rule-making/financial scheme-making drama,
and
that therefore, to the extent possible, petitioners ought not be
penalized
or made to suffer as a result of the subsequently determined invalidity
of Res. 56, the promulgation and implementation of which they had
nothing
to do with.cralaw:red
And here is where
"equity" may properly be invoked:
since "SSS employees who are qualified for compulsory retirement at age
65 or for optional retirement at a lower age are entitled to either the
life annuity under R. A. 660, as amended, or the gratuity under R. A.
1616,
as amended",[22]
it appears that petitioners, being qualified to avail of benefits under
R. A. 660, may also readily qualify under R. A. 1616. It would
therefore
not be misplaced to enjoin the SSS to render all possible assistance to
petitioners for the prompt processing and approval of their
applications
under R. A. 1616, and in the meantime, unless barred by existing
regulations,
to advance to petitioners the difference between the amounts due under
R. A. 1616, and the amounts they already obtained, if any, under R. A.
660.cralaw:red
WHEREFORE, the
petition is hereby dismissed for
lack of merit, there having been no grave abuse of discretion on the
part
of respondent Commission. The assailed Decision of public respondent is
affirmed and SSS Resolution No. 56 is hereby declared illegal, void and
of no effect. The SSS is hereby urged to assist petitioners and
facilitate
their applications under R. A. 1616, and to advance to them, unless
barred
by existing regulations, the corresponding amounts representing the
difference
between the two benefits programs. No costs.cralaw:red
SO ORDERED.cralaw:red
Narvasa, C.J.,
Padilla, Regalado, Davide,
Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Francisco,
Hermosisima, Jr. and Tores, Jr., JJ., concur.cralaw:red
____________________________________
Endnotes
[1]
Rollo, pp. 12-14; signed by Chairman Pascasio S. Banaria and Comms.
Rogelio
B. Espiritu and Sofronio B. Ursal.
[2]
Rollo, p. 3.
[3]
Rollo, pp. 16-17.
[4]
Rollo, pp. 18-19.
[5]
Rollo, pp. 23-26.
[6]
Rollo, pp. 27-29.
[7]
Casibang vs. Phil. Tobacco Administration, 128 SCRA 87, March 5, 1984.
[7]
Rollo, pp. 30-33.
[9]
Rollo, p. 34.
[10]
Petition, p. 4; Rollo, p. 5. Petitioners' Memorandum, pp. 3-4; Rollo,
pp.
64-65.
[11]
Rollo, pp. 8-9.
[12]
Letter to Exec. Secretary Macaraig, Jr.; Rollo, pp. 23-24.
[13] Aquino
vs. NLRC, 206 SCRA 118, February 11, 1992.
[14]
Cena vs. Civil Service Commission, 211 SCRA 179, 186, July 3, 1992.
[15]
Kilusang Mayo Uno Labor Center vs. Garcia, Jr., 239 SCRA 386, December
23,1994.
[16]
Lina, Jr. vs. Cariño, 221 SCRA 515, April 23, 1993
[17]
De Leon and De Leon, Jr., Administrative Law: Text and Cases, 1989
Edition,
p. 65; Citing 73 C.J.S. 413-414, 416-417.
[18]
Tantuico, Jr. vs. Domingo, 230 SCRA 391, February 28, 1994.
[19]
Memorandum for the Respondent, pp. 10-11.
[20]
Rollo, p. 68.
[21]
Causapin vs. Court of Appeals, 233 SCRA 615, July 4, 1994.
[22]
Second Whereas Clause of Res. 56. |