SC voids GSIS employees retirement plan

The Supreme Court (SC) has voided the Retirement Financial Plan (RFP) of the state pension fund agency Government Service Insurance System (GSIS).

This was after the SC upheld the Commission on Audit’s (CoA) ruling that GSIS has no authority to provide chunks of benefits to its employees, especially having a P15-billion actuarial deficiency.

In a 32-page ruling dated Oct. 19, 2011 but was released only on Thursday, the SC, through Associate Justice Teresita Leonardo de Castro, said that CoA did not abuse its discretion when it ruled that the GSIS employees who received the benefits under the RFP are liable for the return of their disallowed benefits.

Under its resolutions issued in 2003 and 2004, CoA said that while GSIS has the authority to create a financial scheme for its retiring employees, it is limited only to employees who will avail of an early retirement caused by the reorganization in the agency.

In this case, however, the CoA said it is not an early retirement scheme but rewarding GSIS retiring employees with large chunks of benefits despite their P15-billion deficiency.

“The power of GSIS in applying the law must not be abused. CoA averred that GSIS was found to be deficient actuarially by P15 billion and for it to reward its employees, who were already enjoying salaries higher than their counterparts in other government agencies, meant that it would have to dip into its principal fund to the prejudice of its members who were the very reason for its establishment,” the SC said, quoting CoA.

The case started in 2000 when the GSIS Board issued Board Resolution 326 that adopted the GSIS Employees Loyalty Incentive Plan which was later amended by Board Resolution 360 providing for a single rate for all positions.

The CoA, through Cristina Dimagiba, said that the Retirement Plan was contrary to law. However, the GSIS insisted that it is legally authorized to adopt such a plan under its charter.

When GSIS president and general manager Winston Garcia assumed office, Dimagiba again sought a review of the resolutions.

Garcia denied Dimagiba’s request, saying that the GSIS was “morally indefensible.”

Subsequently, Dimagiba issued a notice of disallowances to GSIS employees who received as high as P11 million disallowed amount from their retirement benefit.

GSIS officials led by Garcia brought Dimagiba’s ruling to the CoA who affirmed Dimagiba’s findings, pointing out that when it enacted the RFP, GSIS “enlarged the field of its authority and regulation.”

GSIS filed a motion for reconsideration which CoA denied. This prompted GSIS to elevate the case to the SC.

In its decision, the SC said that CoA did not abuse its discretion.

“On the contrary, they (CoA) acted with caution, diligence and vigilance in the exercise of their duties, especially since what was involved were huge amounts of money imbued with public interest since GSIS’s funds come from contributions of its members. Thus, GSIS’ business is to keep in trust the money belonging to its members, who are not limited to its own employees,” the SC said. –PNA