THE 141 retired employees of the Development Bank of the Philippines (DBP) can now enjoy their retirement years after the Supreme Court ordered the release of P747.17 million representing their retirement benefits, which was earlier nullified by the Commission on Audit (COA).
In a 32-page ruling penned by Associate Justice Alfredo Benjamin S. Caguioa, the Court en banc unanimously granted the petition filed by the retired employees seeking the nullification of the January 30, 2013, decision of the COA that affirmed its notice of disallowance covering the bank’s Early Retirement Incentive Program IV (Erip IV).
The Court also made permanent the temporary restraining order (TRO) it issued on February 18, 2014, restraining the COA from implementing the notice of disallowance.
“In view of the Court’s ruling herein that the Erip IV is valid, there is nothing that prevents DBP from releasing the benefits under Erip IV-2010,” the Court ruled.
It can be recalled that in 2007, the supervising auditor of COA issued an audit observation memorandum stating that Erip IV violated the provisions of DBP’s charter, which require the approval of the secretary of finance.
Furthermore, the COA also ruled that the Erip IV violates the “Teves Retirement Law,” which prohibits the creation of a supplementary retirement plan, by increasing the benefits of retiring employees beyond what is allowed under the Government Insurance Service System (GSIS) retirement laws.
The COA insisted that the fact that retirees would be entitled to the regular benefits under GSIS laws, on top of what they would receive under Erip IV, clearly constitutes supplementary retirement benefits, which is a form of double compensation.
The retired employees, on the
other hand, countered that Erip IV is in the form of a separation pay resulting
from
reorganization, thus, they were not barred from claiming benefits under
existing retirement laws despite receiving benefits from the Erip IV.
But the SC ruled that in determining whether a retirement plan is an early retirement incentive plan as opposed to a prohibited supplementary retirement plan, the primary consideration is the objective.
In the case of Erip IV, the SC noted that the purposes are to infuse new talents, skills, insights into the Bank through the entry/promotion of younger corps of personnel; enable the Bank to attain cost savings in its personnel budget; and create new opportunities for career advancement in the Bank.
“Thus, judging from the stated objectives of the Erip IV, the same should be considered as an early retirement incentive plan and not a supplemental retirement plan,” the SC said.
Even if the Erip is considered as a prohibited supplementary plan, the Court pointed out that the same should not have been disallowed by the COA on the basis of the Teves Retirement Law.
The SC noted that while the Teves Retirement Law prohibits supplementary retirement plans, the DBP charter authorizes supplementary retirement plans.
But, the SC held that the DBP charter should prevail over the Teves Retirement Law “not only because it is a later law but also because it is a special law.”