Parreño v. Commission on Audit
REITERATIONFacts
The Antecedents: Salvador Parreño, a retired 2nd Lieutenant of the Armed Forces of the Philippines (AFP), served for 32 years and received a lump sum pension upon retirement in 1982, followed by monthly pension payments. Petitioner later migrated to Hawaii and became a naturalized American citizen. In January 2001, the AFP terminated his monthly pension, citing Section 27 of Presidential Decree No. 1638, as amended by Presidential Decree No. 1650, which mandates the removal of retirees from the retired list and the termination of their benefits upon loss of Filipino citizenship. Procedural History: Following the termination of his pension, petitioner requested reconsideration from the AFP, which was denied by the Judge Advocate General. Petitioner then filed a claim with the Commission on Audit (COA) for the continuation of his monthly pension. The COA, in a Decision dated January 9, 2003, denied the claim for lack of jurisdiction, stating that the issue of constitutionality of the law should be determined by the courts. Petitioner moved for reconsideration, arguing that the COA had the authority to incidentally rule on constitutionality and that direct recourse to the courts would bypass administrative remedies. In a Resolution dated January 13, 2004, the COA denied the motion, reiterating its lack of jurisdiction and noting that even if it assumed jurisdiction, the termination of benefits was mandated by law upon loss of citizenship. The Petition: Petitioner filed a petition for certiorari under Rule 64 in relation to Rule 65 of the 1997 Rules of Civil Procedure before the Supreme Court. The petition raises three main issues: (1) the constitutionality of Section 27 of PD 1638, as amended; (2) the jurisdiction of the COA to rule on the constitutionality of said provision; and (3) whether PD 1638, as amended, has retroactive or prospective effect. Petitioner argues that the termination of his pension violates his vested rights and due process, while the respondents maintain that the COA correctly deferred to the judiciary on constitutional matters and that the law's application is prospective and applicable to petitioner.
Issue(s)
Whether Section 27 of PD 1638, as amended, is constitutional. Whether the COA has jurisdiction to rule on the constitutionality of Section 27 of PD 1638, as amended. Whether PD 1638, as amended, has retroactive or prospective effect, and whether the petitioner has a vested right to his retirement benefits.
Ruling
The petition is dismissed. The Decision and Resolution of the Commission on Audit are affirmed.
Ratio Decidendi
On the constitutionality of Section 27 of PD 1638: The Court found Section 27 of PD 1638, as amended, to be constitutional. It reasoned that the equal protection clause is subject to reasonable classification. The distinction between retirees who remain Filipino citizens and those who lose their citizenship by naturalization is substantial and germane to the purpose of the law, which is to maintain a Citizen Armed Forces. A retiree who loses citizenship renounces allegiance and can no longer be compelled to render military service. The requirement is not oppressive or discriminatory, as it serves national defense interests. The Court also found no denial of due process, as petitioner had opportunities to contest the termination and the AFP was bound to apply the law. The Court noted that petitioner could reacquire his Filipino citizenship under Republic Act No. 9225, and based on a Department of Justice opinion, such retirees are entitled to pension benefits reckoned from the date of their oath of allegiance. This provides a recourse for the petitioner if he chooses to reacquire his citizenship, allowing for the resumption of his retirement benefits from that point forward. On the jurisdiction of the COA: The Court held that the COA's jurisdiction over money claims against the government, as provided by Commonwealth Act No. 327 and Presidential Decree No. 1445, does not extend to the power to rule on the constitutionality or validity of laws. This power is vested in the courts by the 1987 Constitution. Since the petitioner's money claim inherently involved the constitutionality of Section 27 of PD 1638, the COA did not commit grave abuse of discretion in dismissing the claim for lack of jurisdiction. The COA's subsequent statement that the petitioner's entitlement to benefits would cease upon loss of citizenship was an effective denial of the claim based on the operative fact of citizenship loss. On the application of PD 1638, as amended, and vested rights: The Court agreed that PD 1638, as amended, applies prospectively, as it does not provide for retroactive application and Section 36 states it takes effect upon approval. However, the Court disagreed with the interpretation that it only applies to those who joined the military after its effectivity. The Decree applies to all military personnel in service at the time of its approval, including the petitioner who retired in 1982, after the law's enactment in 1979. Therefore, the provisions of PD 1638, as amended, apply to him. The Court ruled that petitioner did not have a vested right to his retirement benefits at the time PD 1638, as amended, was enacted and amended, as he was still in active service. Vested rights to retirement benefits are acquired only upon retirement and meeting eligibility requirements. Since petitioner was in active service when the law was passed, his retirement benefits were future benefits, not vested rights. Furthermore, retirement benefits for military personnel are considered gratuitous, unlike mandatory pension plans where employees have contractual or vested rights.
Main Doctrine
The Commission on Audit's jurisdiction over money claims does not include the power to rule on the constitutionality or validity of laws. A retiree who loses Filipino citizenship forfeits retirement benefits, and this condition does not violate due process or equal protection.