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.

A brief historical backgrounder is in order.  SSS Resolution No. 56,^[3] approved on January 21, 1971, provides financial incentive and inducement to SSS employees qualified to retire to avail of retirement benefits under RA 660 as amended, rather than the retirement benefits under RA 1616 as amended, by giving them "financial assistance" equivalent in amount to the difference between what a retiree would have received under RA 1616, less what he was entitled to under RA 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." (underscoring 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: --

"x x x 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 x x x 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. x x x.

Accordingly, all such claims for financial assistance under SSS Resolution No. 56 dated January 21, 1971 should be disallowed in audit." (underscoring supplied)

Despite the aforequoted 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".

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 overrule 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 PD 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.

The law referred to above is RA 4968 (The Teves Retirement Law), which took effect 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 inoperative or abolished; Provided, That the rights of those who are already eligible to retire thereunder shall not be affected."(underscoring 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.

On March 15, 1994, respondent COA rendered its COA Decision No. 94-126 denying petitioners' request for reconsideration.

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 re-stated thus: Did public respondent abuse its discretion when it disallowed in audit petitioners' claims for benefits under SSS Res. 56?

Petitioners argue that the financial assistance under Res. 56 is not a retirement plan prohibited by RA 4968, and that Res. 56 provides benefits different from and "aside from" what a retiring SSS employee would be entitled to under RA 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 x x x 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 ...'

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 RA 660), in appreciation and recognition of their long and faithful service, be granted financial assistance x x x" 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 application for and approval of retirement benefits under RA 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 RA 660, and that the former is in augmentation or supplementation of the latter benefits.

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, x x x, applies where a retiring SSS employee is qualified to claim under either RA 660 (pension benefit, that is, 5 year lump sum pension and after 5 years, life time pension), or RA 1616 (gratuity benefit plus return of contribution), at his option. The benefits under RA 660 are entirely payable by GSIS while those under RA 1616 are entirely shouldered by SSS except the return of contribution by GSIS.

Resolution No. 56 came about upon observation that qualified SSS employees have invariably opted to retire under RA 1616 instead of RA 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 RA 660 or 1616 should be 'encouraged' to avail for themselves the life annuity under RA 660, as amended, with the SSS providing a 'financial assistance' equivalent to the difference between the benefit under RA 1616 (gratuity plus return of contribution) and the 5-year lump sum pension under RA 660.

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 RA No. 660 or RA 1146 instead of RA 1616, resulting in substantial savings for the SSS despite its having to pay 'financial assistance.'

Until Resolution No. 56 was questioned by COA." (underscoring part of original text; italics ours)

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 RA 1616 with those payable under RA 660 and make the latter program more attractive, merely confirms the foregoing finding.

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 RA 4968?

We answer in the affirmative.  Said Sec. 28 (b) as amended by RA 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 inequitous 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.  To 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".

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.

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] nevertheless, there is really nothing to interpret in either RA 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.

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."

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 x x x 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 RA 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 RA 4968.

Likewise, we cannot but be aware that the clear imbalance between the benefits available under RA 660 and those under RA 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 RA 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.

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 RA 660 only because of the incentives offered by Res. 56, and that absent such incentives, they would have without fail availed of RA 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.

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 RA 660, may also readily qualify under RA 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 RA 1616, and in the meantime, unless barred by existing regulations, to advance to petitioners the difference between the amounts due under RA 1616, and the amounts they already obtained, if any, under RA 660.

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 RA 1616, and to advance to them, unless barred by existing regulations, the corresponding amounts representing the difference between the two benefits programs. No costs.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, Hermosisima, Jr., and Torres, Jr., JJ., concur.

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^[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.

^[8] 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.