SC spares ex-GSIS officers

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Wednesday, November 2, 2011

THE Supreme Court (SC) spared former Government Service Insurance System (GSIS) president and general manager Winston Garcia and fellow officers from any liability over what state auditors called “unusually large benefits.”

They referred to a retirement scheme the state pension fund afforded to its workers in 2000.

But while it partially granted the GSIS petition, the SC en banc also ordered at least 21 recipients of the GSIS retirement benefit plan to refund the incentives they received.


“GSIS’s business is to keep in trust the money belonging to its members, who are not limited to its own employees,” read the Oct. 19 decision penned by Associate Justice Teresita Leonardo-De Castro for the High Tribunal en banc.

The issue began after Ma. Cristina Dimagiba, former GSIS corporate auditor, reportedly told Garcia that the GSIS Retirement or Financial Plan (RFP) was unlawful.

The RFP, which was created and approved on Oct. 17, 2000 based on GSIS Board Resolution 326, was aimed at  providing “an early retirement incentive plan or financial assistance” to the GSIS workers.

Dimagiba requested Garcia to review the GSIS RFP but the latter reportedly denied it.

Dimagiba then asked the Commission on Audit (COA) to determine if the retirement plan was legal.

Dimagiba wanted to know whether the GSIS was right in adopting two retirement plans:  the five-year lump sum payment, which is under Republic Act 1616, and the monthly pension based on the creditable service at 150 percent, under RA 660.

On Aug. 7, 2001, COA General Counsel Santos Alquizalas said in a memo that the GSIS RFP is a supplementary retirement plan, which is prohibited under RA 4968, or the Teves Retirement Law.

He said the two retirement schemes used by GSIS should complement each other to avoid an “irreconcilable inconsistency.”

Citing Alquizalas’s legal view, Dimagiba, the former GSIS corporate auditor, issued the notices of disallowance against the retirement benefit scheme of some 21 payees, who received retirement packages ranging from P90,000 to P11 million on different dates in 2001.

Garcia, who was replaced by Roberto Vergara as the new GSIS president and general manager in September 2010, criticized Dimagiba’s notices of disallowance.

The lawyer said the notice was “highly irregular and precipitate” since it was issued merely based on COA’s opinion, and the audit commission has no authority to declare the GSIS resolution as null and void.

Garcia said the notice of disallowance was premature and tantamount to a pre-audit. He asked Dimagiba to withdraw her notice of disallowance “in the interest of industrial peace in the GSIS.”

In its decision, the SC ruled that the GSIS retirement or financial plan is null and void since it is tailor-fitted to “encourage, induce, or motivate” unqualified state pension fund workers to avail themselves of compulsory, instead of voluntary, retirement.

The High Court said the GSIS retirement scheme runs counter to its main rationale to motivate and reward employees for their “meritorious, faithful, and satisfactory service.”

“The nature of an early retirement incentive plan or a financial assistance plan involves a substantial amount that is given to motivate employees to retire early,” said the SC.

But High Tribunal also ruled that the GSIS Board of Trustees and its officers cannot held accountable for the grant and release the substantial of the retirement scheme’s benefits, citing the presumption of regularity in the performance of their functions.

Published in the Sun.Star Cebu newspaper on November 02, 2011.

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