G.R. No. 138381




EN BANC G.R. No. 138381 April 16, 2002 GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. COMMISSION ON AUDIT, respondent. x---------------------------------------------------------x G.R. No. 141625 April 16, 2002 GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. ALFREDO D. PINEDA, DANIEL GO, FELINO BULANDUS, FELICIMO J. FERRARIS, JR., BEN HUR PORLUCAS, LUIS HIPONIA, MARIA LUISA A. FERNANDEZ, VICTORINA JOVEN, CORAZON S. ALIWANAG, SILVER L. MARTINES, SR., RENATO PEREZ, LOLITA CAYLAN, DOUGLAS VALLEJO and LETICIA ALMAZAN, on their own behalf and on behalf of all GSIS retirees with all of whom they share a common and general interest, respondents. YNARES-SANTIAGO, J.: At the core of these two consolidated petitions is the determination of whether the Commission on Audit (COA) properly disallowed on post-audit, certain allowances and/or fringe benefits granted to employees of the Government Service Insurance System (GSIS), after the effectivity of Republic Act No. 6758, otherwise known as the Salary Standardization Law on July 1, 1989. I. G.R. No. 138381 In this special civil action for certiorari under Rule 65 in relation to Rule 64 of the 1997 Rules of Civil Procedure, petitioner GSIS seeks the annulment of COA Decision No. 98-337 dated August 25, 1998, which affirmed the Resident Auditor's disallowance of monetary benefits granted to or paid by GSIS in behalf of its employees. After the effectivity of R.A. No. 6758 on July 1, 1989, petitioner GSIS increased the following benefits of its personnel: a) longevity pay; b) children's allowance; c) housing allowance for its branch and assistant branch managers; and d) employer's share in the GSIS Provident Fund from 20% to 45% of basic salary for incumbent employees as of June 30, 1989. The GSIS also remitted employer's share to the GSIS Provident Fund for new employees hired after June 30, 1989, continued the payment of premiums for group personnel accident insurance and granted loyalty cash award to its employees in addition to a service cash award. Upon post-audit and examination, the GSIS Corporate Auditor disallowed the aforementioned allowances and benefits, citing Section 12 of R.A. No. 6758 in relation to sub-paragraphs 5.4 and 5.5 of its implementing rules, DBM Corporate Compensation Circular No. 10 (CCC No. 10). The first paragraph of Section 12, R.A. No. 6758 reads: SEC. 12. Consolidation of Allowances and Compensation.- All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989, not integrated into the standardized salary rates shall continue to be authorized. x x x Sub-paragraphs 5.4 and 5.5 of CCC No. 10,1 meanwhile, supplemented Section 12 above by enumerating the additional compensation authorized to be continued for incumbent employees as of July 1, 1989. According to the Corporate Auditor, R.A. No. 6758 authorized the continued grant of allowances/fringe benefits not integrated into the standardized salary for incumbents as of June 30, 1989. However, these non-integrated benefits may not be increased after effectivity of the statute, without prior approval of the DBM or Office of the President or in the absence of legislative authorization in accordance with CCC No. 10. Explaining this position, the Corporate Auditor invoked COA Memorandum No. 90-653 dated June 4, 1990, which states: x x x While it is true that R.A. 6758 and Corporate Compensation Circular (CCC) No. 10 are silent with respect to the increase of allowances/fringe benefits not integrated into the basic salary and allowed to be continued only for incumbents as of June 30, 1989, it would be inconsistent to allow further increase in said allowances and fringe benefits after July 1, 1989 since continuance thereof for incumbents is merely being tolerated until they vacate their present positions for which they have been authorized to receive allowances/fringe benefits.2 The Corporate Auditor also did not allow in audit the remittance of employer's share to the GSIS Provident Fund for new-hires because the continuation of said benefit was only in favor of incumbents, as explicitly stated in the law. The payment of group insurance premiums covering all employees was likewise disallowed, for the reason that under sub-paragraph 5.6 of CCC No. 10,3 all fringe benefits granted on top of basic salary not otherwise enumerated under sub-paragraphs 5.4 and 5.5 thereof were already discontinued effective November 1, 1989. As for the loyalty cash award and the service cash award, the Corporate Auditor opined that only one of the two monetary incentives may be availed of by GSIS personnel. On February 26, 1993, Mr. Julio Navarrete, Vice-President of the GSIS Human Resources Group, wrote to respondent COA appealing, in behalf of GSIS, the afore-stated disallowances by the Corporate Auditor. Mr. Navarrete averred that although it may be conceded that the Salary Standardization Law did not extend the subject benefits to new-hires after the law's effectivity, the increase thereof should nonetheless be allowed for incumbents since these benefits have been enjoyed by said employees even prior to the passage of said law.4 In the case of Philippine Ports Authority v. Commission on Audit,5 which involved a similar increase, after the enactment of R.A. No. 6758, in the representation and transportation allowance (RATA) of Philippine Ports Authority (PPA) employees, it was held that: x x x the date July 1, 1989 does not serve as a cut-off date with respect to the amount of RATA. The date July 1, 1989 becomes crucial only to determine that as of said date, the officer was an incumbent and was receiving the RATA, for purposes of entitling him to its continued grant. This given date should not be interpreted as fixing the maximum amount of RATA to be received by the official.6 It was further alleged that contrary to the Corporate Auditor's contention, the GSIS Board of Trustees retained its power to fix and determine the compensation package for GSIS employees despite the passage of the Salary Standardization Law, pursuant to Section 36 of Presidential Decree No. 1146, as amended by Presidential Decree No. 1981, to wit: Sec. 36. x x x The Board of Trustees has the following powers and functions, among others: x x x x x x x x x (d) Upon the recommendation of the President and General Manager, to approve the System's organizational and administrative structure and staffing pattern, and "to establish, fix, review, revise and adjust the appropriate compensation package for the officers and employees of the System, with reasonable allowances, incentives, bonuses, privileges and other benefits as may be necessary or proper for the effective management, operation and administration of the System." For the purpose of this and the preceding subsection, the System shall be exempt from the rules and requirements of the Office of the Budget and Management and the Office of the Compensation and Position Classification; x x x x x x x x x Pursuant thereto, the GSIS Board of Trustees may validly increase and grant the subject benefits, even without securing the imprimatur of the DBM, Office of the President or Congress. On August 25, 1998, the COA affirmed the disallowances made by the Corporate Auditor and held that Section 36 of P.D. No. 1146, as amended, was already repealed by Section 16 of R.A. No. 6758.7 The COA similarly concluded that the GSIS Board of Trustees may not unilaterally augment or grant benefits to its personnel, without the necessary authorization required under CCC No. 10.8 GSIS filed a motion for reconsideration of the COA decision, invoking the ruling in De Jesus, et al. v. COA and Jamoralin.9 Corporate Compensation Circular No. 10 (CCC No. 10) was declared to be of no legal force or effect due to its non-publication in the Official Gazette or a newspaper of general circulation. In view of this development, GSIS posited that the questioned disallowances no longer had any leg to stand on and that COA should consequently lift the disallowances premised on CCC No. 10. On March 23, 1999, the COA denied the motion for reconsideration stating: Although CCC No. 10 has been declared ineffective due to its non-publication as provided for in Article 2 of the Civil Code of the Philippines, the disallowances on the increased rates of the allowances/fringe benefits can still be sustained because as ruled earlier, the power of the governing boards of corporations to fix compensation and allowances of personnel, including the authority to increase the rates, pursuant to their specific charters had already been repealed by Sec. 3 of P.D. 1597 and Section 16 of R.A. 6758. The other reasons or grounds relied upon by the petitioner upon which the Motion is predicated have already been judiciously passed upon by this Commission when it rendered the subject COA Decision No. 98-337. Accordingly, there being no new, sufficient and material evidence adduced as would warrant a reversal or modification of the decision herein sought to be reconsidered, this Commission denies with finality the instant motion for reconsideration for utter lack of merit.10 Hence, this petition, challenging the above decision and resolution of the COA on the following grounds: A.)RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT THE POWER SPECIFICALLY GRANTED BY PRESIDENTIAL DECREE NO. 1146, AS AMENDED, TO THE GSIS BOARD OF TRUSTEES, TO ESTABLISH AND FIX THE APPROPRIATE COMPENSATION PACKAGE FOR GSIS OFFICERS AND EMPLOYEES HAS ALREADY BEEN REPEALED BY REPUBLIC ACT NO. 6758. B.)RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DENYING PETITONER'S MOTION FOR RECONSIDERATION DESPITE THE DECLARATION BY THIS HONORABLE COURT IN THE CASE OF RODOLFO S. DE JESUS et al. vs. COMMISSION ON AUDIT and LEONARDO L. JAMORALIN, THAT CCC NO. 10 - THE MAIN BASIS OF THE QUESTIONED DISALLOWANCE - IS INVALID AND INEFFECTIVE FOR LACK OF THE REQUIRED PUBLICATION.11 II. G.R. No. 141625 This petition for review on certiorari under Rule 45 of the Rules of Court was precipitated by the factual antecedents of G.R. No. 138381. While GSIS was appealing the disallowances made by the Corporate Auditor above, some of its employees retired and submitted the requisite papers for the processing of their retirement benefits. Since the retired employees received allowances and benefits which had been disallowed by the Corporate Auditor, GSIS required them to execute deeds of consent that would authorize GSIS to deduct from their retirement benefits the previously paid allowances, in case these were finally adjudged to be improper. Some of the retired employees agreed to sign the deed, while others did not. Nonetheless, GSIS went ahead with the deductions. On April 16, 1998, a number of these retired GSIS employees12 (hereafter referred to as "retirees") brought Case No. 001-98 before the GSIS Board of Trustees (hereafter referred to as "GSIS Board") questioning the legality of the deductions. They claimed that COA disallowances can not be deducted from retirement benefits, considering that these were explicitly exempted from such deductions under the last paragraph of Section 39, Republic Act No. 8291, which states: SEC. 39. Exemption from Tax, Legal Process and Lien. - x x x x x x x x x x x x The funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to the benefits under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and from all financial obligations of the members, including his pecuniary accountability arising from or caused or occasioned by his exercise or performance of his official functions or duties, or incurred relative to or in connection with his position or work except when his monetary liability, contractual or otherwise, is in favor of the GSIS. The GSIS Board subsequently referred the case for hearing to its Corporate Secretary, Atty. Alicia Albert. Thereafter, the retirees and GSIS, through its Legal Services Group (LSG), entered into a stipulation of facts and agreed on a focal issue, namely: whether the COA disallowances may be legally deducted from the retirement benefits, on the premise that the same are monetary liabilities of the retirees in favor of GSIS under Section 39 above. GSIS also insisted that since the deductions were anchored on the disallowances made by the COA, the retirees' remedy was to ventilate the issue before said Commission and not the GSIS Board. Meanwhile, the De Jesus case mentioned in G.R. No. 138381 was promulgated, rendering CCC No. 10 legally ineffective. This prompted the hearing officer to suggest that the parties enter into an agreement as to what allowances and benefits are covered by CCC No. 10, so that a partial decision can be rendered thereon. The retirees thus filed a motion for partial decision, submitting that there no longer existed any obstacle to the increase in allowances and benefits covered by CCC No. 10. These allegedly include: a) GSIS management's share in the Provident Fund; b) initial payment of the productivity bonus; c) acceleration implementation of the new salary schedule effective August 1, 1995; d) increase in clothing allowance, rice allowance, meal subsidy, children's allowance and longevity pay; e) loyalty award; f) 1995 mid-year financial assistance; and g) other allowances as may be suggested by the Vice-President of the GSIS Human Resources Group.13 On November 25, 1998, GSIS filed an opposition to the retiree's motion for partial decision,14 asserting that De Jesus had no bearing on the principal issue which, as agreed upon, was the interpretation of Section 39 of RA No. 8291. GSIS also filed on even date, a motion to dismiss,15 alleging that the nullity of CCC No. 10 rendered the petition moot and academic and paved the way for the payment of the controverted allowances earlier deducted from the retirement benefits. Replying to the two pleadings filed by GSIS, the retirees countered that a motion to dismiss was a prohibited pleading under Section 14.13, Rule XIV of the GSIS Implementing Rules and Regulations.16 Moreover, the retirees maintained that a motion to dismiss may be filed in proceedings before the GSIS Board only prior to the filing of an answer which GSIS had already done. Also, the LSG had previously agreed to a partial decision based on the De Jesus case; it could thus no longer take a contradictory stand by opposing the retiree's motion for partial decision.17 On January 14, 1999, the retirees filed a motion for summary judgment18 claiming that there were no factual issues involved and that the question raised in the petition was purely legal in nature. The matter was directly submitted to the GSIS Board for its consideration and resolution. On March 3, 1999, the GSIS Board issued Resolution No. 72,19 dismissing the petition. A motion for reconsideration filed by the retirees was also denied by the Board in its Resolution No. 16120 dated May 18, 1999. The matter was then elevated to the Court of Appeals, which rendered a decision on September 30, 1999, disposing as follows: IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. Resolution No. 72, Annex "A" of the Petition and Resolution No. 161 Annex "C" of the Petition are hereby SET ASIDE and NULLIFIED. The Hearing Officer of the Board of Trustees of the Respondent is directed to proceed, with dispatch, with the proceedings of Case No. 001-98, as provided for in the Rules and regulations implementing Republic Act 8291 (IRR). SO ORDERED.21 The appellate court held that the motion to dismiss filed by the LSG before the GSIS Board is a prohibited pleading under applicable GSIS rules. The GSIS also had jurisdiction over the retirees' petition, as it pertained to the interpretation and application of Section 39 of R.A. No. 8291, a law exclusively administered by the GSIS Board. Contrary to the LSG's submissions, the Court of Appeals ruled that there was no identity in subject matter between the retiree's petition and the appeal from the auditor's disallowances filed by GSIS with the COA. Thus, the GSIS Board may take cognizance of the retirees' petition independently from the COA proceedings. Hence, this second petition, assigning the following as errors: I THE COURT OF APPEALS ERRED IN RULING THAT THE BOARD OF TRUSTEES OF GSIS HAS JURISDICTION OVER THE CASE. II THE COURT OF APPEALS ERRED IN RULING THAT THE CASE PENDING BEFORE THE SUPREME COURT IS DIFFERENT FROM THE PRESENT CASE.22 On August 20, 2001, the two petitions were consolidated. During the pendency of these petitions, GSIS Board Resolution No. 79,23 which authorized the Provident Fund rate increase for incumbent employees, was approved retroactively from March 1, 1994 by then President Joseph Estrada.24 Thus, there no longer appears to be any basis for disallowing the rate increase in management contribution to the Provident Fund from 20% to 45% of the basic salary received by petitioner's incumbent employees. The presidential approval cured the lack of authorization cited by respondent COA for disallowing this particular increase in benefit. We now proceed to the resolution of the twin petitions. Petitioner GSIS insists that the GSIS Board retained its power to increase the subject benefits under Section 36 of P.D. 1146, as amended (or the Revised GSIS Charter), despite the passage of R.A. No. 6758, particularly Section 16 thereof. The latter, which is a general law, can not repeal or take precedence over the former because the Revised GSIS Charter is a special law that specifically exempts GSIS from Office of the Compensation and Position Classification coverage. We need not delve lengthily into this submission as this was earlier laid to rest by the Court in Philippine International Trading Corporation (PITC) v. COA,25 where we held that "the repeal by Section 16 of RA 6758 of 'all corporate charters that exempt agencies from the coverage of the system' was clear and expressed necessarily to achieve the purposes for which the law was enacted, that is, the standardization of salaries of all employees in government owned and/or controlled corporations to achieve 'equal pay for substantially equal work'."26 As things now stand, GSIS is already exempt from salary standardization by express provision of R.A. 829127 – a subsequent enactment approved on May 30, 1997 which amended the Revised GSIS Charter. But since GSIS was still governed by the latter at the time the increase in benefits were disallowed in audit, GSIS was then yet covered by the Salary Standardization Law, thereby making our ruling in PITC presently relevant and applicable. We now come to the legal propriety of the COA disallowances. For purposes of clarity, a distinction must initially be made between those allowances which are deemed consolidated into the standardized salary and those which are not under the terms of R.A. No. 6758. As correctly pointed out by petitioner GSIS, the housing allowance, longevity pay and children's allowance are non-integrated benefits, expressly made so by sub-paragraphs 5.4 and 5.5 of CCC No. 10 in relation to the last sentence of Section 12 (par. 1), R.A. No. 6758. On the other hand, the payment of group personnel accident insurance premiums, loyalty cash award and service cash award are not excluded from the standardized salary by the same provisions of CCC No. 10 or R.A. No. 6758. These latter allowances are thus considered integrated into the basic salary and are treated differently under the same law. A. NON-INTEGRATED BENEFITS AND ALLOWANCES a. Longevity Pay and Children's Allowance As regards the increase in longevity pay and children's allowance, we find applicable our pronouncement in Philippine Ports Authority (PPA) v. COA.28 This case involved an adjustment in the representation and transportation allowance (RATA) of incumbent PPA employees after the effectivity of R.A. No. 6758 on July 1, 1989. The RATA therein is similar to the longevity pay and children's allowance subject of the instant petition, in the sense that: a) it is also a non-integrated allowance authorized to be continued for incumbents under Section 12, R.A. No. 6758; and b) the rate thereof did not consist of a definite amount but was subject to certain factors and/or stipulations that were nonetheless fixed before R.A. 6758 took effect. In the PPA case, the adjustment was brought about by a corresponding increase in the employees' basic salary upon which the 40% RATA was based. Respondent Commission disallowed the payment of RATA differentials arguing, as in this petition, that the RATA should be fixed at the prevailing rate prior to July 1, 1989, regardless of the increase in basic salary. It was postulated therein that consistent with the second sentence of said Section 12 (par. 1), the RATA should no longer be based on 40% of basic standardized salary but on the highest amount of RATA received by the incumbent as of July 1, 1989. We rejected respondent COA's interpretation of Section 12 and held that the date July 1, 1989 should not be construed as a cut-off date for setting the amount of allowances authorized to be continued under said provision. The date July 1, 1989 is important only for determining whether an employee is an incumbent and receiving the allowance prior to the law's effectivity in order to ascertain if such employee is qualified to its continued grant. It is not, however, to be interpreted as fixing the maximum amount of allowance that an incumbent employee is authorized to receive, but is only a qualifying date imposed by the statute. Accordingly, the specific amount of longevity pay and children's allowance being received by an incumbent GSIS employee as of July 1, 1989 is not to be considered as the highest amount authorized under the law. It is thus evident that in adjusting the amount of allowances mentioned above, petitioner GSIS was merely complying with the policy of non-diminution of pay and benefits enunciated in R.A. No. 6758.29 This policy does not only pertain specifically to the amount being received by the incumbent as of July 1, 1989, but also to the terms and conditions attached to these benefits prior to the passage of the statute. Relative to this, it should be noted that respondent COA did not dispute the fact that these benefits, including the terms and conditions thereof, are part of a compensation package granted by the GSIS Board to incumbents even before R.A. 6758 took effect. In turn, this compensation package was incorporated in the 1978 GSIS Revised Compensation System approved by the President, upon recommendation of the Department of Budget and Management (DBM). Thus, to peg the amount of these non-integrated allowances at the figure being received by the incumbent as of July 1, 1989 would vary the terms of the benefits to which the incumbents are entitled. This could not have been the intendment of the statute, because such interpretation would effectively impair the incumbents' rights to these allowances, which have already accrued prior to July 1, 1989. In other words, before R.A. No. 6758 was enacted, incumbent GSIS employees had a fixed right to these allowances under the terms and conditions then obtaining.30 They could not therefore be excluded from its enjoyment under the same terms and conditions without violating basic precepts of fairness and due process. b. Housing Allowance In contrast to the two preceding non-integrated benefits, it appears that the housing allowance given to petitioner's incumbent branch and assistant branch managers before the passage of R.A. No. 6758 consisted of a fixed amount of P500.00 and P300.00 respectively. Said amounts were subsequently increased to P2,000.00 and P3,000.00 by virtue of GSIS Board Resolution No. 29431 dated July 26, 1991. As stated earlier, the power of the GSIS Board to "establish, fix, review, revise and adjust" the allowances, privileges and other benefits of its employees under Section 36 of the Revised GSIS Charter has been repealed by R.A. No. 6758.32 As a consequence, the GSIS Board may no longer grant any increase in housing allowance on its own volition after June 30, 1989. Further, unlike the two preceding non-integrated benefits, it cannot be said that the affected branch and assistant branch managers acquired a vested right to any amount of housing allowance in excess of that granted to them before the passage of R.A. No. 6758. They could not have been entitled to any amount other than that which was already determined before the law took effect, because the terms of this allowance did not admit of any adjustment. Otherwise stated, since the amount of said housing allowance was fixed, the disallowance by the COA of increases therein would not result in any diminution of benefits for these incumbent managers. Neither can the GSIS Board unilaterally grant said increases by board resolution because it no longer had any power to do so when it issued Resolution No. 294. It appears that respondent COA did not totally disallow the increase in housing allowance, but merely approved a lesser amount. Respondent COA allowed a 100% increase of P1,000.00 and P600.00 respectively, in accordance with the amount authorized by the DBM.33 In fact, the DBM permitted the increase in express recognition of the fact that this has been the practice in GSIS before the advent of R.A. No. 6758. Consequently, it is only to the extent of the approved amount that the housing allowance should be allowed in audit. B. INTEGRATED BENEFITS AND ALLOWANCES a. Group Personnel Accident Insurance Premiums As stated earlier, the payment of premiums for group personnel accident insurance in favor of incumbent GSIS employees was not listed as an exception to the standardized salary under Section 12, R.A. No. 6758 and sub-paragraphs 5.4 and 5.5 of CCC No. 10. As such, it is considered as a fringe benefit granted on top of basic salary which, according to sub-paragraph 5.6 of CCC No. 10, must be discontinued as of November 1, 1989. However, as pointed out by petitioner GSIS, CCC No. 10 was declared to be of no legal force and effect in De Jesus v. COA.34 It can not thus be utilized as a justification for depriving incumbent employees of integrated benefits which they were receiving prior to R.A. No. 6758. As held in De Jesus: x x x it is decisively clear that DBM CCC No. 10, which completely disallows payment of allowances and other additional compensation to government officials and employees, starting November 1, 1989, is not a mere interpretative and internal regulation. It is something more than that. And why not, when it tends to deprive government workers of their allowances and additional compensation sorely needed to keep body and soul together. At the very least, before said circular under attack may be permitted to substantially reduce their income, the government officials and employees concerned should be apprised and alerted by the publication of subject circular in the Official Gazette or in a newspaper of general circulation in the Philippines-to the end that they may be given amplest opportunity to voice out whatever opposition they may have, and to ventilate their stance on the matter. This approach is more in keeping with democratic precepts and rudiments of fairness and transparency.35 Conformably, since the disallowance of the premium payments was founded upon CCC No. 10, the consequent outcome of the latter's nullification is to remove any obstacle to the aforesaid benefit. The subsequent publication of CCC No. 10 in the Official Gazette on March 1, 1999,36 neither cured the defect nor retroact to the time that the aforesaid items were disallowed in audit. Again, in PITC v. COA,37 we ruled that from the time the COA disallowed the benefit up to the filing of the instant petition, CCC No. 10 remained in legal limbo due to its lack of publication. And because publication is a condition precedent to the effectivity of CCC No. 10, it must first be complied with before affecting individual rights; otherwise, "such omission would offend due process insofar as it would deny the public, knowledge of the laws that are supposed to govern it."38 b. Loyalty and Service Cash Award We have carefully examined the records of the case and find that the disallowance of the simultaneous grant of these two integrated benefits was not so much founded on CCC No. 10, but upon a ruling made by the Civil Service Commission (CSC). Notably, with respect to the loyalty and service cash award, respondent COA held: As regards the payment of loyalty cash award under Sec. 7 (e), Rule X, of the CSC Omnibus rules Implementing Book V of E.O. No. 292 and service cash award, this Commission holds that only one can be availed of by GSIS employees in the light of the clear ruling of the Civil Service Commission embodied in a letter dated May 12, 1993 that since both benefits have the same rationale, which is to reward long and dedicated service, "availment of the award can be made only under either system, whichever is more advantageous to the employees."39 The foregoing conclusion was apparently based on the position taken by Corporate Auditor Fe R. Munoz, who expounded thereon in a second indorsement40 dated December 14, 1993 as follows: Service Cash Award is an incentive granted exclusively to any officer or employee of the GSIS who has rendered at least fifteen (15) years continuous and dedicated service to the GSIS. It entitles them to receive amounts ranging from P500.00 to P15,000.00 according to the number of years of service, pursuant to the provisions of the Collective Bargaining Agreement (CBA), which payments are deducted by this Office from payment of Loyalty (Cash) Award. On the other hand, this should not be confused with the amount of Loyalty (Cash) Award in graduated amounts of P1,200.00, P1,300.00, P1,400.00 and P1,500.00 for every year of service of GSIS executives and employees who have completed at least ten (10) years of continuous service as authorized under Board Resolution No. 333 dated October 29, 1992 (Annex 7), using as legal basis Section 7 (e), Rule X of the Omnibus Civil Service Law and Rules, Implementing Book V of Executive Order No. 292, providing for the cash bonus of not less than One Hundred Pesos (P100.00) per year of service, chargeable against Agency's savings. It seems that the foregoing provision allows for a minimum but not for a maximum amount to be given, thereby giving the agencies enough flexibility to fix their own maximum amounts depending on the agency's savings. It is worthy to note in this connection that when the Civil Service Commission issued Memorandum Circular No. 42, series 1992, amending Section 7 (e), Rule X of the Omnibus Civil Service Law and Rules, providing that the amount of cash bonus to be given should not be more than P100.00 per year of service, the GSIS returned to the old computation as authorized under Board Resolutions No. 192 and 187 dated May 16, 1989 and May 29, 1992 respectively (Annexes 8 and 9). Hence, the matter was referred to the Civil Service Commission for clarification. The Commission ruled in a letter dated May 12, 1993 (Annex 10) addressed to PGM Cesar N. Sarino, that the availment of the award can be made only under either system, whichever is more advantageous to the employees. Petitioner GSIS did not squarely address the above finding of respondent COA or the Corporate Auditor. Instead, it based its arguments on the general assumption that all the benefits and allowances subject of this petition were disallowed on the basis of Section 12, R.A. No. 6758 and its implementing rules. This is beside the point, however, as it can readily be seen that respondent COA's ruling on the loyalty and service cash award is actually based on a purported CSC declaration relative thereto. As a result, there has been no real joinder of issues as far as these benefits are concerned. Coming now to G.R. No. 141625, the Court of Appeals did not commit any reversible error when it held that the petition filed before the GSIS Board questioning the legality of the deductions could proceed independently from the appeal brought by petitioner GSIS from the COA disallowances. No error could be attributed to the appellate court's finding that there was no identity of subject matter or issue between the COA proceedings and the retirees' claim before the GSIS Board. However, considering that it has already been resolved in G.R. No. 138381, we no longer find it necessary to discuss whether GSIS can deduct the COA disallowances from the respondents/retirees' retirement benefits. Having settled G. R. No. 138381, it is now incumbent upon petitioner GSIS to reimburse the proper amounts to respondents/retirees. Necessarily, the amount of said refund should be in accord with our ruling in G.R. No. 138381. WHEREFORE, in view of the foregoing, G.R. No. 138381 is PARTLY GRANTED. The disallowance of the adjustment in longevity pay and children's allowance and the payment of group personnel accident insurance premiums in favor of incumbent GSIS employees is SET ASIDE. The disallowance of the increase in housing allowance and the simultaneous grant of loyalty and service cash award are AFFIRMED. Petitioner GSIS is further ordered to REFUND the amounts deducted from the retirement benefits in G.R. No. 141625, corresponding to the amount of benefits allowed in G.R. No. 138381. SO ORDERED. Bellosillo, Puno, Vitug, Mendoza, Panganiban, Quisumbing , De Leon, Jr., Sandoval-Gutierrez, and Carpio, JJ., concur. Davide, Jr., C. J., Melo, Kapunan, and Austria-Martinez, JJ., on official leave. Corona, J., took no part in the deliberation-absent. Footnotes 1 5.4. The rates of the following allowances/fringe benefits which are not integrated into the basic salary and which are allowed to be continued after June 30, 1989 shall be subject to the condition that the grant of such benefits is covered by statutory authority: 5.4.1. Representation and Transportation Allowances (RATA) of incumbent of the position authorized to receive the same at the highest amount legally authorized as of June 30, 1989 for the level of his position within the particular GOCC/GFI; 5.4.2. Uniform and Clothing Allowance at a rate as previously authorized; 5.4.3. Hazard pay as authorized by law; 5.4.4. Honoraria/additional compensation for employees on detail with special projects or inter-agency undertakings; 5.4.5. Honoraria for services rendered by researchers, experts and specialists who are of acknowledged authorities in their fields of specialization; 5.4.6. Honoraria for lecturers and resource persons/speakers; 5.4.7. Overtime pay in accordance to Memorandum Order No. 228; 5.4.8. Clothing/laundry allowances and subsistence allowance of marine officers and crew on board GOCCs/GFIs owned vessels and used in their operations, and of hospital personnel who attend directly to patients and who by nature of their duties are required to wear uniforms; 5.4.9. Quarters Allowance of officials and employees who are presently entitled to the same; 5.4.10. Overseas, Living Quarters and other allowances presently authorized for personnel stationed abroad; 5.4.11. Night Differential of personnel on night duty; 5.4.12. Per Diems of members of the governing Boards of GOCCs/GFIs at the rate as prescribed in their respective charters; 5.4.13. Flying Pay of personnel undertaking serial flights; 5.4.14. Per Diems/Allowances of Chairman and Members/Staff of collegial bodies and Committee; and, 5.4.15. Per Diems/ Allowances of officials and employees on official foreign and local travel outside of their official station. 5.5. Other allowances/fringe benefits not likewise integrated into the basic salary and allowed to be continued only for incumbents as of June 30, 1989 subject to the condition that the grant of same is with appropriate authorization either from the DBM, Office of the President or legislative issuances are as follows: 5.5.1. Rice Subsidy; 5.5.2. Sugar Subsidy; 5.5.3. Death Benefits other than those granted by the GSIS; 5.5.4. Medical/dental/optical allowances/benefits; 5.5.5. Children's Allowance; 5.5.6. Special Duty Pay/Allowance; 5.5.7. Meal Subsidy; 5.5.8. Longevity Pay; and 5.5.9. Teller's Allowance. 2 Rollo in G.R. No. 138381, pp. 23-24. 3 5.6. Payment of other allowances/fringe benefits and all other forms of compensation granted on top of basic salary, whether in cash or in kind, not mentioned in Sub-Paragraphs 5.4 and 5.5 above shall be discontinued effective November 1, 1989. Payment made for such allowances/fringe benefits after said date shall be considered as illegal disbursement of public funds. 4 COA Records, Volume I, pp. 70-75. 5 214 SCRA 653 (1992). 6 Id., at 664. 7 SEC 16. Repeal of Special Salary Laws and Regulations.- All laws, decrees, executive orders, corporate charters, and other issuances or parts thereof, that exempt agencies from the coverage of the System, or that authorize and fix position classification, salaries, pay rates or allowances of specified positions, or groups of officials and employees or of agencies, which are inconsistent with the System, including the proviso under Section 2 and Section 16 of Presidential Decree No. 985 are hereby repealed. 8 Supra, Note 2 at 23-28. 9 294 SCRA 152 (1998). 10 Supra, Note 2 at 31. 11 Id., at 13. 12 Alfredo D. Pineda, Daniel Go, Felino Bulandus, Felicimo J. Ferraris, Jr., Ben Hur Porlucas, Luis Hiponia, Maria Luisa A. Fernandez, Victorina Joven, Corazon S. Aliwanag, Silver L. Martines, Sr., Renato Perez, Lolita Caylan, Douglas Vallejo and Leticia Almazan. 13 Rollo in G. R. No. 141625, pp. 103-105. 14 Id., at 107-114. 15 Id. at 115-120. 16 Section 14.13. Prohibited Pleadings and Motions. – The following pleadings, motions or petitions shall not be allowed in the cases covered by this rule: (1) Motions to Dismiss; x x x. 17 CA Records, pp. 139-145. 18 Supra, Note 13 at 121-132. 19 Id., at 145. 20 Id., at 146. 21 Id., at 31. 22 Id., at 43. 23 Id., at 110. 24 Id., at 112-113. 25 309 SCRA 177 (1999). 26 Id., at 191. 27 The pertinent provision is Section 43 (d) which states: SEC. 43. Powers and Functions of the Board of Trustees. – The Board of Trustees shall have the following powers and functions: x x x x x x x x x (d) upon the recommendation of the President and General Manager, to approve the GSIS' organizational and administrative structures and staffing pattern, and to establish, fix, review, revise and adjust the appropriate compensation package for the officers and employees of the GSIS with reasonable allowances, incentives, bonuses, privileges and other benefits as may be necessary or proper for the effective management, operation and administration of the GSIS, which shall be exempt from republic Act No. 6758, otherwise known as the Salary Standardization Law and Republic Act No. 7430, otherwise known as the Attrition Law; x x x x x x x x x 28 Supra, Note 5; reiterated in Manila International Airport Authority (MIAA) v. COA, 238 SCRA 714 (1994). 29 See Note 5 at 660. 30 Id., at 661. 31 Supra, Note 4 at 119-120. 32 Supra, Note 29. 33 Supra, Note 4 at 117-118. 34 Supra, Note 9. 35 Id., at 158. 36 95 O.G. 1 (March 1999). 37 Supra, Note 29. 38 Id., at 189, citing Tanada v. Tuvera, 146 SCRA 453 (1986). 39 Supra, Note 2 at 27. 40 Supra, Note 4 at 40-43. The Lawphil Project - Arellano Law Foundation