Personnel Actions You are hereby appointed as METER READER (APPRENTICE)

under BENECO-NEA Management with compensation at the

G.R. No. 108405. April 4, 2003 rate of SIXTY-SIX PESOS AND SEVENTY-FIVE CENTAVOS
(P66.75) per day from October 08 to 31, 1990.
JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD
BUSTILLO, DANILO C. BALANAG, FERDINAND DELLA, x x x. (Annex B, Complainants Joint Position Paper)
EDWARD A. ABELLERA, ALEXANDER ABANAG,
DOMINGO ASIA, FRANCISCO BAYUGA, ARTHUR M. The said term notwithstanding, the complainants were
ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT allowed to work beyond October 31, 1990, or until January 2,
A. ORDOO, BERNARD V. JULARBAL, IGNACIO C. 1991. On January 3, 1991, they were each served their
ALINGBAS and LEODEL N. identical notices of termination dated December 29, 1990.
SORIANO, Petitioners, v. NATIONAL LABOR RELATIONS The same read:
COMMISSION (THIRD DIVISION), and BENGUET ELECTRIC
COOPERATIVE, INC. (BENECO) respondents. Please be informed that effective at the close of office hours
of December 31, 1990, your services with the BENECO will
DECISION be terminated. Your termination has nothing to do with your
performance. Rather, it is because we have to retrench on
AUSTRIA-MARTINEZ, J.: personnel as we are already overstaffed.

Before us is a petition for certiorari seeking to annul the x x x. (Annex C, CJPP)

decision promulgated by the National Labor Relations
Commission (NLRC) on July 2, 1992 in NLRC CA No. L- On the same date, the complainants filed separate
000384-92,1 and its resolution dated September 24, 1992 complaints for illegal dismissal. And following the
denying petitioners motion for reconsideration. amendment of said complaints, they submitted their joint
position paper on April 4, 1991. Respondent filed its position
The factual background of this case, as summarized by the paper on April 2, 1991.
Labor Arbiter, is as follows:
It is the contention of the complainants that they were not
Fifteen (15) in all, these are consolidated cases for illegal apprentices but regular employees whose services were
dismissal, underpayment of wages and claim for indemnity illegally and unjustly terminated in a manner that was
pay against a common respondent, the Benguet Electric whimsical and capricious. On the other hand, the respondent
Cooperative, Inc., (BENECO for short) represented by its invokes Article 283 of the Labor Code in defense of the
Acting General Manager, Gerardo P. Versoza. questioned dismissal.2cräläwvirtualibräry

Complainants services as meter readers were contracted for On October 18, 1991, the Labor Arbiter rendered a decision,
hardly a months duration, or from October 8 to 31, 1990. the dispositive portion of which reads as follows:
Their employment contracts, couched in identical terms,
read: WHEREFORE, judgment is hereby rendered:
1. Dismissing the complaints for illegal dismissal filed by the Aggrieved by the Labor Arbiters decision, the complainants
complainants for lack of merit. However in view of the offer and the respondent filed their respective appeals to the
of the respondent to enter into another temporary NLRC.
employment contract with the complainants, the respondent
is directed to so extend such contract to each complainant, On July 2, 1992, the NLRC modified its judgment, to wit:
with the exception of Jaime Viernes, and to pay each the
amount of P2,590.50, which represents a months salary, as WHEREFORE, premises considered, judgment is hereby
indemnity for its failure to give complainants the 30-day rendered modifying the appealed decision by declaring
notice mandated under Article 283 of the Labor Code; or, at complainants dismissal illegal, thus ordering their
the option of the complainants, to pay each financial reinstatement to their former position as meter readers or to
assistance in the amount of P5,000.00 and the P2,590.50 any equivalent position with payment of backwages limited
above-mentioned. to one year and deleting the award of indemnity and
attorneys fees. The award of underpayment of wages is
2. Respondent is also ordered: hereby AFFIRMED.

A. To pay complainants the amount representing SO ORDERED.4cräläwvirtualibräry

underpayment of their wages:
On August 27, 1992, complainants filed a Motion for
a) Jaime Viernes, Carlos Garcia, Danilo Balanag, Edward Clarification and Partial Reconsideration.5 On September 24,
Abellera, Francisco Bayuga, Arthur Oribello, Buenaventura de 1992, the NLRC issued a resolution denying the complainants
Guzman, Jr., Robert Ordoo, Bernard Jularbal and Leodel motion for reconsideration.6cräläwvirtualibräry
Soriano, P1,994.25 each;
Hence, complainants filed herein petition.
b) Bernard Bustillo and Domingo Asia, P1,838.50 each; and
Private respondent BENECO filed its Comment; the Office of
c) Ferdinand Della, Alexander Abanag and Ignacio the Solicitor General (OSG) filed a Manifestation and Motion
Alingbas, P1,816.25 each. in Lieu of Comment; public respondent NLRC filed its own
Comment; and petitioners filed their Manifestation and
B. To extend to complainant Jaime Viernes an appointment Motion In Lieu of Consolidated Reply. Public respondent
as regular employee for the position of meter reader, the job NLRC, herein petitioners, and private respondent filed their
he held prior to his termination, and to pay him P2,590.50 as respective memoranda, and the OSG, its Manifestation in
indemnity, plus the underpayment of his wages as above 1994.
stated.
Pursuant to our ruling in Rural Bank of Alaminos Employees
C. To pay P7,000.00 as and for attorneys fees. Union vs. NLRC,7 to wit:

No damages. in the decision in the case of St. Martin Funeral Homes vs.
National Labor Relations Commission, G.R. No. 130866,
SO ORDERED.3cräläwvirtualibräry promulgated on September 16, 1998, this Court pronounced
that petitions for certiorari relating to NLRC decisions must
be filed directly with the Court of Appeals, and labor cases because the case is elevated on certiorari before the
pending before this Court should be referred to the appellate Supreme Court.9cräläwvirtualibräry
court for proper disposition. However, in cases where the
Memoranda of both parties have been filed with this Court We find the petition partly meritorious.
prior to the promulgation of the St. Martin decision, the
Court generally opts to take the case itself for its final As to the first issue: We sustain petitioners claim that they
disposition.8cräläwvirtualibräry should be reinstated to their former position as meter
readers, not on a probationary status, but as regular
and considering that the parties have filed their respective employees.
memoranda as of 1994, we opt to resolve the issues raised
in the present petition. Reinstatement means restoration to a state or condition from
which one had been removed or separated.10 In case of
The parties raised the following issues: probationary employment, Article 281 of the Labor Code
requires the employer to make known to his employee at the
1. Whether the respondent NLRC committed grave abuse of time of the latters engagement of the reasonable standards
discretion in ordering the reinstatement of petitioners to their under which he may qualify as a regular employee.
former position as meter readers on probationary status in
spite of its finding that they are regular employees under A review of the records shows that petitioners have never
Article 280 of the Labor Code. been probationary employees. There is nothing in the letter
of appointment, to indicate that their employment as meter
2. Whether the respondent NLRC committed grave abuse of readers was on a probationary basis. It was not shown that
discretion in limiting the backwages of petitioners to one petitioners were informed by the private respondent, at the
year only in spite of its finding that they were illegally time of the latters employment, of the reasonable standards
dismissed, which is contrary to the mandate of full under which they could qualify as regular employees.
backwages until actual reinstatement but not to exceed three Instead, petitioners were initially engaged to perform their
years. job for a limited duration, their employment being fixed for a
definite period, from October 8 to 31, 1990.
3. Whether the respondent NLRC committed grave abuse of
discretion in deleting the award of indemnity pay which had Private respondents reliance on the case of Brent School,
become final because it was not appealed and in deleting the Inc. vs. Zamora,[11] wherein we held as follows:
award of attorneys fees because of the absence of a trial-
type hearing. Accordingly, and since the entire purpose behind the
development of legislation culminating in the present Article
4. Whether the mandate of immediately executory on the 280 of the Labor Code clearly appears to have been, as
reinstatement aspect even pending appeal as provided in the already observed, to prevent circumvention of the employees
decision of Labor Arbiters equally applies in the decision of right to be secure in his tenure, the clause in said article
the National Labor Relations Commission even pending indiscriminately and completely ruling out all written or oral
appeal, by means of a motion for reconsideration of the agreements conflicting with the concept of regular
order reinstating a dismissed employee or pending appeal employment as defined therein should be construed to refer
to the substantive evil that the Code itself has singled out:
agreements entered into precisely to circumvent security of the usual trade or business of the employer. The test is
tenure. It should have no application to instances where a whether the former is usually necessary or desirable in the
fixed period of employment was agreed upon knowingly and usual business or trade of the employer. The connection can
voluntarily by the parties, without any force, duress or be determined by considering the nature of the work
improper pressure being brought to bear upon the employee performed and its relation to the scheme of the particular
and absent any other circumstances vitiating his consent, or business or trade in its entirety. Also if the employee has
where it satisfactorily appears that the employer and been performing the job for at least a year, even if the
employee dealt with each other on more or less equal terms performance is not continuous and merely intermittent, the
with no moral dominance whatever being exercised by the law deems repeated and continuing need for its performance
former over the latter.12cräläwvirtualibräry as sufficient evidence of the necessity if not indispensability
of that activity to the business. Hence, the employment is
is misplaced. considered regular, but only with respect to such activity and
while such activity exists.15cräläwvirtualibräry
The principle we have enunciated in Brent applies only with
respect to fixed term employments. While it is true that Clearly therefrom, there are two separate instances whereby
petitioners were initially employed on a fixed term basis as it can be determined that an employment is regular: (1) The
their employment contracts were only for October 8 to 31, particular activity performed by the employee is necessary or
1990, after October 31, 1990, they were allowed to continue desirable in the usual business or trade of the employer; or
working in the same capacity as meter readers without the (2) if the employee has been performing the job for at least
benefit of a new contract or agreement or without the term a year.
of their employment being fixed anew. After October 31,
1990, the employment of petitioners is no longer on a fixed Herein petitioners fall under the first category. They were
term basis. The complexion of the employment relationship engaged to perform activities that are necessary to the usual
of petitioners and private respondent is thereby totally business of private respondent. We agree with the labor
changed. Petitioners have attained the status of regular arbiters pronouncement that the job of a meter reader is
employees. necessary to the business of private respondent because
unless a meter reader records the electric consumption of
Under Article 280 of the Labor Code, a regular employee is the subscribing public, there could not be a valid basis for
one who is engaged to perform activities which are necessary billing the customers of private respondent. The fact that the
or desirable in the usual business or trade of the employer, petitioners were allowed to continue working after the
or a casual employee who has rendered at least one year of expiration of their employment contract is evidence of the
service, whether continuous or broken, with respect to the necessity and desirability of their service to private
activity in which he is employed. respondents business. In addition, during the preliminary
hearing of the case on February 4, 1991, private respondent
In De Leon vs. NLRC,[13] and Abasolo vs. NLRC,[14] we laid even offered to enter into another temporary employment
down the test in determining regular employment, to wit: contract with petitioners. This only proves private
respondents need for the services of herein petitioners. With
The primary standard, therefore, of determining regular the continuation of their employment beyond the original
employment is the reasonable connection between the term, petitioners have become full-fledged regular
particular activity performed by the employee in relation to employees. The fact alone that petitioners have rendered
service for a period of less than six months does not make vindicate or recognize the right of an employee to due
their employment status as probationary. process which has been violated by the employer.

Since petitioners are already regular employees at the time In the present case, the private respondent, in effecting the
of their illegal dismissal from employment, they are entitled dismissal of petitioners from their employment, failed to
to be reinstated to their former position as regular comply with the provisions of Article 283 of the Labor Code
employees, not merely probationary. which requires an employer to serve a notice of dismissal
upon the employees sought to be terminated and to the
As to the second issue, Article 279 of the Labor Code, as Department of Labor, at least one month before the intended
amended by R.A. No. 6715, which took effect on March 21, date of termination. Petitioners were served notice on
1989, provides that an illegally dismissed employee is January 3, 1991 terminating their services, effective
entitled to full backwages, inclusive of allowances, and to his December 29, 1990, or retroactively, in contravention of
other benefits or their monetary equivalent computed from Article 283. This renders the private respondent liable to pay
the time his compensation was withheld from him up to the indemnity to petitioners.
time of his actual reinstatement. Since petitioners were
employed on October 8, 1990, the amended provisions of Thus, we find that the NLRC committed grave abuse of
Article 279 of the Labor Code shall apply to the present case. discretion in deleting the award of indemnity. In Del Val vs.
Hence, it was patently erroneous, tantamount to grave abuse NLRC,[19] we held that the award of indemnity ranges
of discretion on the part of the public respondent in limiting from P1,000.00 to P10,000.00 depending on the particular
to one year the backwages awarded to petitioners. circumstances of each case. In the present case, the amount
of indemnity awarded by the labor arbiter is P2,590.50,
With respect to the third issue, an employer becomes liable which is equivalent to petitioners one-month salary. We find
to pay indemnity to an employee who has been dismissed if, no cogent reason to modify said award, for being just and
in effecting such dismissal, the employer fails to comply with reasonable.
the requirements of due process.16 The indemnity is in the
form of nominal damages intended not to penalize the As to the award of attorneys fees, the same is justified by
employer but to vindicate or recognize the employees right the provisions of Article 111 of the Labor Code, to wit:
to procedural due process which was violated by the
employer.17 Under Article 2221 of the Civil Code, nominal Art. 111. Attorneys fees (a) In cases of unlawful withholding
damages are adjudicated in order that a right of the plaintiff, of wages the culpable party may be assessed attorneys fees
which has been violated or invaded by the defendant, may equivalent to ten percent of the amount of wages recovered.
be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him. (b) It shall be unlawful for any person to demand or accept,
in any judicial or administrative proceedings for the recovery
We do not agree with the ruling of the NLRC that indemnity of the wages, attorneys fees which exceed ten percent of the
is incompatible with the award of backwages. These two amount of wages recovered.
awards are based on different considerations. Backwages are
granted on grounds of equity to workers for earnings lost due As to the last issue, Article 223 of the Labor Code is plain
to their illegal dismissal from work.18 On the other hand, the and clear that the decision of the NLRC shall be final and
award of indemnity, as we have earlier held, is meant to executory after ten (10) calendar days from receipt thereof
by the parties. In addition, Section 2(b), Rule VIII of the New Bellosillo, (Chairman), Mendoza, Quisu
Rules of Procedure of the NLRC provides that should there be
a motion for reconsideration entertained pursuant to Section Personnel actions
14, Rule VII of these Rules, the decision shall be executory
after ten calendar days from receipt of the resolution on such G.R. NO. 161065. April 15, 2005]
motion.
EUFEMIO C. DOMINGO, CELSO D. GANGAN, PACASIO S.
We find nothing inconsistent or contradictory between Article BANARIA, SOFRONIO B. URSAL, ALBERTO P. CRUZ,
223 of the Labor Code and Section 2(b), Rule VIII, of the MARIA L. MATIB, RACHEL U. PACPACO, ANGELO G.
NLRC Rules of Procedure. The aforecited provision of the SANCHEZ, and SHERWIN A. SIP-AN, Petitioners, v. HON.
NLRC Rules of Procedure merely provides for situations GUILLERMO N. CARAGUE, in his capacity as Chairman,
where a motion for reconsideration is filed. Since the Rules Commission on Audit, HON. EMMANUEL M. DALMAN
allow the filing of a motion for reconsideration of a decision and HON. RAUL C. FLORES, in their capacities as
of the NLRC, it simply follows that the ten-day period Commissioners, Commission on Audit, Respondents.
provided under Article 223 of the Labor Code should be
reckoned from the date of receipt by the parties of the DECISION
resolution on such motion. In the case at bar, petitioners
received the resolution of the NLRC denying their motion for SANDOVAL-GUTIERREZ, J.:
reconsideration on October 22, 1992. Hence, it is on
November 2, 1992 that the questioned decision became Judicial power is the power to hear and decide cases pending
executory. between parties who have the right to sue in courts of law
and equity.1 Corollary to this dictum is the principle of locus
WHEREFORE, the petition is partially GRANTED. The standi of a litigant. He who is directly affected and whose
decision of the National Labor Relations Commission dated interest is immediate and substantial has the standing to
July 2, 1992 is MODIFIED. Private respondent Benguet sue. Thus, a party must show a personal stake in the
Electric Cooperative, Inc. (BENECO) is hereby ordered to outcome of the case or an injury to himself that can be
reinstate petitioners to their former or substantially redressed by a favorable decision in order to warrant an
equivalent position as regular employees, without loss of invocation of the court's jurisdiction and justify the exercise
seniority rights and other privileges appurtenant thereto, of judicial power on his behalf.
with full backwages from the time of their dismissal until
they are actually reinstated. The amount of P2,590.50 Assailed in this Petition for Certiorari is the legality of
awarded by the labor arbiter as indemnity to petitioners is Resolution No. 2002-05 of the Commission on Audit (COA)
REINSTATED. Private respondent is also ordered to pay providing for Organizational Restructuring Plan. The above-
attorneys fees in the amount of ten percent (10%) of the named petitioners basically alleged therein that this Plan is
total monetary award due to the petitioners. In all other intrinsically void for want of an enabling law authorizing COA
respects the assailed decision and resolution are AFFIRMED. to undertake the same and providing for the necessary
standards, conditions, restrictions, limitations, guidelines,
Costs against private respondent BENECO. and parameters. Petitioners further alleged that in initiating
such Organizational Restructuring Plan without legal
SO ORDERED.
authority, COA committed grave abuse of discretion Petitioners invoke our ruling in Chavez v. Public Estates
amounting to lack or excess of jurisdiction. Authority,4 Agan, Jr. v. Philippine International Air Terminals
Co., Inc.,5 and Information Technology Foundation of the
At this point, it is pertinent to state that the COA is a quasi- Philippines v. Commission on Elections6 that where the
judicial body and that its decision, order or ruling may be subject matter of a case is a matter of public concern and
brought to the Supreme Court on certiorari by the aggrieved imbued with public interest, then this fact alone gives them
party.2 legal standing to institute the instant petition. Petitioners
contend that the COA Organizational Restructuring Plan is
Petitioners Eufemio C. Domingo, Celso C. Gangan, Pascasio not just a mere reorganization but a revamp or overhaul of
S. Banaria are retired Chairmen, while Sofronio B. Ursal, and the COA, with a "spillover effect" upon its audit performance.
Alberto P. Cruz are retired Commissioners of COA. All claim This will have an impact upon the rest of the government
"to maintain a deep-seated abiding interest in the affairs of bodies subject to its audit supervision, thus, should be
COA,"3 especially in its Organizational Restructuring Plan, as treated as a matter of transcendental importance.
concerned taxpayers. Consequently, petitioners' legal standing should be
recognized and upheld.
The other petitioners are incumbent officers or employees of
COA. Maria L. Matib and Angelo G. Sanchez are State Auditor Respondents, through the Office of the Solicitor General
III and State Auditor II, respectively, assigned to the (OSG), counter that petitioners have no legal standing to file
Cordillera Administrative Region (CAR). Prior to the the present petition since following our ruling in Kilusang
implementation of the questioned COA Organizational Mayo Uno Labor Center v. Garcia, Jr.,7 they have not shown
Restructuring Plan, they were Resident Auditors and later "a personal stake in the outcome of the case" or an actual or
Audit Team Leaders. Petitioner Rachel U. Pacpaco is a State potential injury that can be redressed by our favorable
Auditor III assigned to CAR and a Team Supervisor, while decision. Petitioners themselves admitted that "they do not
petitioner Sherwin A. Sipi-an is a State Auditor I also seek any affirmative relief nor impute any improper or
assigned at the CAR. These petitioners claim that they were improvident act against the said respondents" and "are not
unceremoniously divested of their designations/ranks as Unit motivated by any desire to seek affirmative relief from COA
Head, Team Supervisor, and Team Leader upon or from respondents that would redound to their personal
implementation of the COA Organizational Restructuring Plan benefit or gain." It is clear then that petitioners failed to
without just cause and without due process, in violation of show any "present substantial interest" in the outcome of
Civil Service Law. Moreover, they were deprived of their this case, citing Kilosbayan v. Morato.8 Nor may petitioners
respective Representation and Transportation Allowances claim that as taxpayers, they have legal standing since
(RATA), thus causing them undue financial prejudice. nowhere in their petition do they claim that public funds are
being spent in violation of law or that there is a
Petitioners now invoke this Court's judicial power to strike misapplication of the taxpayers' money, as we ruled
down the COA Organizational Restructuring Plan for being in Dumlao v. Comelec.9
unconstitutional or illegal.
Petitioners' reliance upon our rulings in Chavez,10 Agan,
Initially, for our resolution is the issue of whether petitioners Jr.,11 and  Information Technology Foundation12 is flawed.
have the legal standing to institute the instant petition.
In Chavez, we ruled that the petitioner has legal standing improvident act against the respondents" and "are not
since he is a taxpayer and his purpose in filing the petition is motivated by any desire to seek affirmative relief from COA
to compel the Public Estate Authority (PEA) to perform its or from respondents that would redound to their personal
constitutional duties with respect to: (a) the right of the benefit or gain." Clearly, they do not have any legal standing
citizens to information on matters of public concern; and (b) to file the instant suit.
the application of a constitutional provision intended to
insure the equitable distribution of alienable lands of the We are well aware of the averments of petitioners Matib,
public domain among Filipino citizens. The thrust of the first Pacpaco, Sanchez, and Sipi-An that they were demoted and
is to compel PEA to disclose publicly information on the sale unceremoniously divested of their previous designations as
of Government lands worth billions of pesos, as mandated by Unit Head, Team Supervisor, or Team Leader; that they were
the Constitution and statutory law. The thrust of the second deprived of their RATA; that they were relegated to being
is to prevent PEA from alienating hundreds of hectares of mere Team Members, entitled to only a reimbursable
alienable lands of the public domain, thereby compelling it to transportation allowance; and that they were denied due
comply with a constitutional duty to the nation. We held that process.
these matters are of transcendental public importance.13
Such averments lack merit. Actually, they were not demoted.
In Agan, Jr., we held that petitioners have legal standing as Under Section 11, Rule VII of the Omnibus Rules
they have a direct and substantial interest to protect. By the Implementing Book V of the Administrative Code of 1987, a
implementation of the PIATCO contracts, they stand to lose demotion is the movement from one position to
their source of livelihood, a property right zealously another involving the issuance of an appointment with
protected by the Constitution. Such financial prejudice on diminution in duties, responsibilities, status, or rank which
their part is sufficient to confer upon them the requisite locus may or may not involve reduction in salary.15 A demotion by
standi.14 assigning an employee to a lower position in the same
service which has a lower rate of compensation is
In Information Technology Foundation, there were two tantamount to removal, if no cause is shown for it.16
reasons why petitioners' standing was recognized. First, the
nation's political and economic future virtually hangs in the Here, there have been no new appointments issued to Matib,
balance, pending the outcome of the 2004 elections. Pacpaco, Sanchez, and Sipi-An under the COA Organizational
Accordingly, the award for the automation of the electoral Restructuring Plan. Thus, their contention that they have
process was a matter of public concern, imbued with public been demoted is baseless.
interest. Second, the individual petitioners, as taxpayers,
asserted a material interest in seeing to it that public funds Moreover, the change in their status from COA auditors
are properly used. (receiving monthly RATA) to COA auditors (receiving only
reimbursable RATA) cannot be attributed to the COA
Here, petitioners have not shown any direct and personal Organizational Restructuring Plan but to the implementation
interest in the COA Organizational Restructuring Plan. There of the Audit Team Approach (ATAP), pursuant to COA
is no indication that they have sustained or are in imminent Resolution No. 96-305 dated April 16, 1996.
danger of sustaining some direct injury as a result of its
implementation. In fact, they admitted that "they do not Under the ATAP, an audit team, not a resident auditor, is
seek any affirmative relief nor impute any improper or deployed to conduct an audit. An audit team may be
composed of two (2) or more members under an Audit Team Memorandum that the principle of non-diminution of benefits
Leader. Whenever practicable, an Audit Team Supervisor has been upheld.
supervises at least three (3) audit teams. The composition of
an audit team is not permanent. Hence, an Audit Team Thus, in the implementation of the COA Organizational
Member may be designated or assigned as an Audit Team Restructuring Plan, we fail to see how petitioners could have
Leader for one assignment and subsequently as a Team sustained personal injury as they have not shown to have a
Member in another engagement. The designation depends personal stake therein. Accordingly, they are wanting in legal
upon the position or rank of the one who is designated as an standing to institute the instant petition. Corollarily, we find
Audit Team Leader. Thus, a State Auditor III who may have no reason to delve into the constitutionality or legality of the
been assigned as an Audit Team Leader in one engagement COA Organizational Restructuring Plan.
may find himself relegated to being an Audit Team Member
in another engagement, if a State Auditor IV or State Auditor WHEREFORE, the petition is DISMISSED. No
V is designated as the Audit Team Leader. pronouncement as to costs.

Pursuant to the COA Organizational Restructuring Plan, the SO ORDERED.

COA issued Memorandum No. 2002-03417 providing for the
guidelines regarding the payment of RATA, thus: Nature and Purpose of Pension

1. All holders of State Auditor IV position shall be entitled to [G.R. NO. 146494 : July 14, 2004]
fixed commutable RATA wherever they are assigned.
GOVERNMENT SERVICE INSURANCE SYSTEM, Cebu City
2. Henceforth, only State Auditors IV shall be assigned as Branch, Petitioner, v. MILAGROS O.
new Unit Heads or Team Leaders. MONTESCLAROS, Respondent.

3. State Auditors below State Auditor IV assigned as Unit DECISION

Heads or Team Leaders who have been receiving fixed RATA
shall continue to be designated as such and to receive the CARPIO, J.:
RATA until relieved of the designation for incompetence,
inefficiency, or misconduct. The Case

All others who collect RATA on reimbursable basis, including This is a Petition for Review on Certiorari of the
those paid on a daily basis under COA Resolution No. 99-007 Decision1 dated 13 December 2000 of the Court of Appeals in
dated June 7, 1999, are likewise entitled thereto. CA-G.R. CV No. 48784.The Court of Appeals affirmed the
Decision2 of the Regional Trial Court, Branch 21, Cebu City
Matib, Pacpaco, Sanchez, and Sipi-An are not qualified to be (trial court), which held that Milagros Orbiso Montesclaros is
Audit Team Leaders or to receive fixed monthly RATA since entitled to survivorship pension.
none of them holds the rank or position of State Auditor IV.
But this does not mean that they are not entitled to receive The Facts
reimbursable RATA if they are designated as Audit Team
Leaders. It is clear from the text of the said COA
Sangguniang Bayan member Nicolas Montesclaros (Nicolas) such benefits are conjugal property. The trial court held that
married Milagros Orbiso (Milagros) on 10 July 1983.3 Nicolas the prohibition in Section 18 of PD 1146 is deemed repealed
was a 72- year old widower when he married Milagros who for being inconsistent with the Family Code, a later law.The
was then 43 years old. Family Code has retroactive effect if it does not prejudice or
impair vested rights.
On 4 January 1985, Nicolas filed with the Government
Service Insurance System (GSIS) an application for GSIS appealed to the Court of Appeals, which affirmed the
retirement benefits effective 18 February 1985 under decision of the trial court.Hence, this Petition for Review .
Presidential Decree No. 1146 or the Revised Government
Service Insurance Act of 1977 (PD 1146) .In his retirement In the meantime, in a letter dated 10 January 2003, Milagros
application, Nicolas designated his wife Milagros as his sole informed the Court that she has accepted GSIS decision
beneficiary.4 Nicolas last day of actual service was on 17 disqualifying her from receiving survivorship pension and
February 1985.5 On 31 January 1986, GSIS approved Nicolas that she is no longer interested in pursuing the
application for retirement effective 17 February 1984, case.10 Commenting on Milagros letter, GSIS asserts that the
granting a lump sum payment of annuity for the first five Court must decide the case on the merits.11 ςrνll
years and a monthly annuity thereafter.6 Nicolas died on 22
April 1992. Milagros filed with GSIS a claim for survivorship The Court will resolve the issue despite the manifestation of
pension under PD 1146. On 8 June 1992, GSIS denied the Milagros. The issue involves not only the claim of Milagros
claim because under Section 18 of PD 1146, the surviving but also that of other surviving spouses who are similarly
spouse has no right to survivorship pension if the surviving situated and whose claims GSIS wouldalso deny based on
spouse contracted the marriage with the pensioner within the proviso.Social justice and public interest demand that we
three years before the pensioner qualified for the resolve the constitutionality of the proviso.
pension.7 According to GSIS, Nicolas wed Milagros on 10 July
1983, less than one year from his date of retirement on 17 The Ruling of the Court of Appeals
February 1984.
The Court of Appeals agreed with the trial court that the
On 2 October 1992, Milagros filed with the trial court a retirement benefits are onerous and conjugal because the
special civil action for declaratory relief questioning the pension came from the deceased pensioners salary
validity of Section 18 of PD 1146 disqualifying her from deductions.The Court of Appeals held that the pension is not
receiving survivorship pension. gratuitous since it is a deferred compensation for services
rendered.
On 9 November 1994, the trial court rendered judgment
declaring Milagros eligible for survivorship pension. The trial The Issues
court ordered GSIS to pay Milagros the benefits due
including interest. Citing Articles 1158 and 1179 of the Family GSIS raises the following
Code, the trial court held that retirement benefits, which the issues:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
pensioner has earned for services rendered and for which the
pensioner has contributed through monthly salary 1. Whether Section 16 of PD 1146 entitles Milagros to
deductions, are onerous acquisitions. Since retirement survivorship pension;chanroblesvirtuallawlibrary
benefits are property the pensioner acquired through labor,
2. Whether retirement benefits form part of conjugal (b) At the end of the guaranteed periods mentioned in the
property;chanroblesvirtuallawlibrary preceding sub-section (a), the survivorship pension shall be
paid as follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
3. Whether Articles 254 and 256 of the Family Code repealed
Section 18 of PD 1146.12 (1) when the dependent spouse is the only survivor, he shall
receive the basic survivorship pension for life or until he
The Courts Ruling remarries;chanroblesvirtuallawlibrary

The pertinent provisions of PD 1146 on survivorship benefits (2) when onlydependent children are the survivors, they
read:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ shall be entitled to the survivorship pension for as long as
they are qualified;chanroblesvirtuallawlibrary
SEC. 16.Survivorship Benefits.When a member or pensioner
dies, the beneficiary shall be entitled to survivorship benefits (3) when the survivors are the dependent spouse and the
provided for in sections seventeen and eighteen hereunder. dependent children, they shall be entitled to the survivorship
The survivorship pension shall consist pension so long as there are dependent children and,
of:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ thereafter, the surviving spouse shall receive the basic
survivorship pension for life or until he remarries.
(1) basic survivorship pension which is fifty percent of the
basicmonthly pension; andcralawlibrary (c) In the absence of primary beneficiaries, the secondary
beneficiaries designated by the deceased and recorded in the
(2) dependents pension not exceeding fifty percent of the System, shall be entitled to:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
basic monthly pension payable in accordance with the rules
and regulations prescribed by the System. (1) a cash payment equivalent to thirty times the basic
survivorship pension when the member is qualified for old-
SEC. 17. Death of a Member. (a) Upon the death of a age pension;or
member, the primary beneficiaries shall be entitled
to:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ (2) a cash payment equivalent to fiftypercent of the average
monthly compensation for each year he paid contributions,
(1) the basic monthly pension which is guaranteed for five but not less than fivehundred pesos;Provided,  That, the
years; Provided,That, at the option of the beneficiaries, it member paid at least thirty-six monthly contributions within
may be paidin lump sum as defined in this Act:Provided, the five-year periodimmediately preceding his death or paid
further, That, the member is entitled to old-age pension at a total of at least one hundred eighty monthly contributions
the time ofhis death; or prior to his death.

(2) the basic survivorship pension which is guaranteed for (d) When the primary beneficiaries are not entitled to the
thirty months and the dependents pension;Provided,  That, benefits mentioned in paragraph (a) of this section, they
the deceasedhad paid at least thirty-six monthly shall receive a cash payment equivalent to one hundred
contributions within the five-year period immediately percent of the average monthly compensation for each year
preceding his death, or a total of at least one hundred eighty the member paid contributions, but not less than five
monthly contributions prior tohis death.
hundred pesos.In the absence of primary beneficiaries, the because it violates the due process clause. The proviso is
amount shall revert to the funds of the System. also discriminatory and denies equal protection of the law.

SEC. 18.Death of a Pensioner.  Upon the death of a Retirement Benefits as Property Interest
pensioner, the primary beneficiaries shall receive the
applicable pension mentioned under paragraph (b) of section Under Section 5 of PD 1146, it is mandatory for the
seventeen of this Act: Provided, That, the dependent government employee to pay monthly contributions.PD 1146
spouse shall not be entitled to said pension if his mandates the government to include in its annual
marriage with the pensioner is contracted within three appropriation the necessary amounts for its share of the
years before the pensioner qualified for the contributions. It is compulsory on the government employer
pension.When the pensioner dies within the period covered to take off and withhold from the employees monthly salaries
by the lump sum, the survivorship pension shall be paid only their contributions and to remit the same to GSIS. 16 The
after the expiration of the said period.This shall also apply to government employer must also remit its corresponding
the pensioners living as of the effectivity of this Act, but the share to GSIS.17 Considering the mandatory salary
survivorship benefit shall be based on the monthly pension deductions from the government employee, the government
being received at the time of death. (Emphasis pensions do not constitute mere gratuity but form part of
supplied)ςrαlαωlιbrαrÿ compensation.

Under PD 1146, the primary beneficiaries are (1) the In a pension plan where employee participation is
dependent spouse until such spouse remarries, and mandatory, the prevailing view is that employees have
(2) the dependent children.13 The secondary beneficiaries contractual or vested rights in the pension where the pension
are the dependent parents and legitimate descendants is part of the terms of employment.18 The reason for
except dependent children.14 The law defines dependent as providing retirement benefits is to compensate service to the
the legitimate, legitimated, legally adopted, acknowledged government. Retirement benefits to government employees
natural or illegitimate child who is unmarried, not gainfully are part of emolument to encourage and retain qualified
employed, and not over twenty-one years of age or is over employees in the government service. Retirement benefits to
twenty-one years of age but physically or mentally government employees reward them for giving the best
incapacitated and incapable of self-support. The term also years of their lives in the service of their country.19
includes the legitimate spouse dependent for support
on the member, and the legitimate parent wholly Thus, where the employee retires and meets the eligibility
dependent on the member for support.15 requirements, he acquires a vested right to benefits that is
protected by the due process clause.20 Retirees enjoy a
The main question for resolution is the validity of the proviso protected property interest whenever they acquire a right to
in Section 18 of PD 1146, which proviso prohibits the immediate payment under pre-existing law.21 Thus, a
dependent spouse from receiving survivorship pension if such pensioner acquires a vested right to benefits that have
dependent spouse married the pensioner within three years become due as provided under the terms of the public
before the pensioner qualified for the pension (the proviso). employees pension statute.22 No law can deprive such person
of his pension rights without due process of law, that is,
We hold that the proviso, which was the sole basis for the without notice and opportunity to be heard.23
rejection by GSIS of Milagros claim, is unconstitutional
In addition to retirement and disability benefits, PD 1146 available to him and his dependents to the extent permitted
also provides for benefits to survivors of deceased by available resources;chanroblesvirtuallawlibrary
government employees and pensioners.Under PD 1146, the
dependent spouse is one of the beneficiaries of survivorship WHEREAS, provisions of existing laws have impeded the
benefits.A widows right to receive pension following the efficient and effective discharge by the System of its
demise of her husband is also part of the husbands functions and have unduly hampered the System from being
contractual compensation.24 more responsive to the dramatic changes of the times and
from meeting the increasing needs and expectations of the
Denial of Due Process Filipino public servant;chanroblesvirtuallawlibrary

The proviso is contrary to Section 1, Article III of the WHEREAS, provisions of existing laws that have prejudiced,
Constitution, which provides that [n]o person shall be rather than benefited, the government employee; restricted,
deprived of life, liberty, or property without due process of rather than broadened, his benefits, prolonged, rather than
law, nor shall any person be denied the equal protection of facilitated the payment of benefits, must now yield to his
the laws.The proviso is unduly oppressive in outrightly paramount welfare;chanroblesvirtuallawlibrary
denying a dependent spouses claim for survivorship pension
if the dependent spouse contracted marriage to the WHEREAS, the social security and insurance benefits of
pensioner within the three-year prohibited period. There is government employees must be continuously re-examined
outright confiscation of benefits due the surviving spouse and improved to assure comprehensive and integrated social
without giving the surviving spouse an opportunity to be security and insurance programs that will provide benefits
heard.The proviso undermines the purpose of PD 1146, responsive to their needs and those of their dependents in
which is to assure comprehensive and integrated social the event of sickness, disability, death, retirement, and other
security and insurance benefits to government employees contingencies; and to serve as a fitting reward for dedicated
and their dependents in the event of sickness, disability, public service;chanroblesvirtuallawlibrary
death, and retirement of the government employees.
WHEREAS, in the light of existing economic conditions
The whereas clauses of PD 1146 affecting the welfare of government employees, there is a
state:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ need to expand and improve the social security and
insurance programs administered by the Government Service
WHEREAS, the Government Service Insurance System in Insurance System, specifically, among others, by increasing
promoting the efficiency and welfare of the employees of the pension benefits, expanding disability benefits, introducing
Government of thePhilippines, administers the laws that survivorship benefits, introducing sickness and income
grant to its members social security and insurance benefits, and eventually extending the compulsory coverage
benefits;chanroblesvirtuallawlibrary of these programs to all government employees regardless of
employment status.
WHEREAS, it is necessary to preserve at all times the
actuarial solvency of the funds administered by the System; PD 1146 has the following
to guarantee to the government employee all the benefits purposes:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
due him; and to expand and increase the benefits made
A. to preserve at all times the actuarial solvency of the funds pension system classifies spouses into those married less
administered by the System;chanroblesvirtuallawlibrary than one year before a members death and those married
one year or more. The classification seeks to prevent
b. to guarantee to the government employee all the benefits conscious adverse risk selection of deathbed marriages
due him; andcralawlibrary where a terminally ill member of the pension system marries
another so that person becomes eligible for benefits.
c. to expand, increase, and improve the social security and In Sneddon v. The State Employees Retirement System
insurance benefits made available to him and his dependents of Illinois, 27 the Appellate Court of Illinois held that such
such as: classification was based on difference in situation and
circumstance, bore a rational relation to the purpose of the
        increasing pension benefits statute, and was therefore not in violation of constitutional
guarantees of due process and equal protection.
        expanding disability benefits
A statute based on reasonable classification does not violate
        introducing survivorship benefits the constitutional guaranty of the equal protection of the
law.28 The requirements for a valid and reasonable
        introducing sickness income benefits classification are: (1) it must rest on substantial distinctions;
(2) it must be germane to the purpose of the law; (3) it must
        extending compulsory membership to all not be limited to existing conditions only; and (4) it must
apply equally to all members of the same class. 29 Thus, the
government employees irrespective of status25 law may treat and regulate one class differently from another
class provided there are real and substantial differences to
The law extends survivorship benefits to the surviving and distinguish one class from another.30
qualified beneficiaries of the deceased member or pensioner
to cushion the beneficiaries against the adverse economic The proviso in question does not satisfy these
effects resulting from the death of the wage earner or requirements.The proviso discriminates against the
pensioner.26 dependent spouse who contracts marriage to the pensioner
within three years before the pensioner qualified for the
Violation of the Equal Protection Clause pension.31 Under the proviso, even if the dependent spouse
married the pensioner more than three years before the
pensioners death, the dependent spouse would still not
The surviving spouse of a government employee is entitled
receive survivorship pension if the marriage took place within
to receive survivors benefits under a pension
three years before the pensioner qualified for pension.The
system.However, statutes sometimes require that the spouse
object of the prohibition is vague.There is no reasonable
should have married the employee for a certain period before
connection between the means employed and the purpose
the employees death to prevent sham marriages
intended.The law itself does not provide any reason or
contracted for monetary gain.One example is the Illinois
purpose for such a prohibition.If the purpose of the proviso is
Pension Code which restricts survivors annuity benefits to a
to prevent deathbed marriages,then we do not see why
surviving spouse who was married to a state employee for at
the proviso reckons the three-year prohibition from the date
least one year before the employees death.TheIllinois
the pensioner qualified for pension and not from the date the
pensioner died. The classification does not rest on substantial cannot deny the claim of Milagros O. Montesclaros for
distinctions. Worse, the classification lumps all those survivorship benefits based on this invalid proviso.
marriages contracted within three years before the pensioner
qualified for pension as having been contracted primarily for No pronouncement as to costs.
financial convenience to avail of pension benefits.
Construction of Retirement Laws
Indeed, the classification is discriminatory and arbitrary.This
is probably the reason Congress deleted the proviso in SO ORDERED.
Republic Act No. 8291 (RA 8291),32 otherwise known as the
Government Service Insurance Act of 1997, the law revising G.R. NO. 138381 : November 10, 2004]
the old charter of GSIS (PD 1146) .Under the implementing
rules of RA 8291, the surviving spouse who married the GOVERNMENT SERVICE INSURANCE
member immediately before the members death is still SYSTEM, Petitioner, v. COMMISSION ON
qualified to receive survivorship pension unless the GSIS AUDIT, Respondent.
proves that the surviving spouse contracted the marriage
solely to receive the benefit.33 [G.R. NO. 141625 : November 10, 2004]

Thus, the present GSIS law does not presume that marriages GOVERNMENT SERVICE INSURANCE
contracted within three years before retirement or death of a SYSTEM, Petitioner, v. ALFREDO D. PINEDA, DANIEL GO,
member are sham marriages contracted to avail of FELINO BULANDUS, FELICIMO J. FERRARIS, JR., BEN
survivorship benefits.The present GSIS law does not HUR PORLUCAS, LUIS HIPONIA, MARIA LUISA A.
automatically forfeit the survivorship pension of the surviving FERNANDEZ, VICTORINA JOVEN, CORAZON S.
spouse who contracted marriage to a GSIS member within ALIWANAG, SILVER L. MARTINES, SR., RENATO PEREZ,
three years before the members retirement or death.The law LOLITA CAYLAN, DOUGLAS VALLEJO and LETICIA
acknowledges that whether the surviving spouse contracted ALMAZAN, on their own behalf and on behalf of all
the marriage mainly to receive survivorship benefits is a GSIS retirees with all of whom they share a common
matter of evidence. The law no longer prescribes a sweeping and general interest, Respondents.
classification that unduly prejudices the legitimate surviving
spouse and defeats the purpose for which Congress enacted RESOLUTION
the social legislation.
YNARES-SANTIAGO, J.:
WHEREFORE, the petition is DENIED for want of merit. We
declare VOID for being violative of the constitutional On April 16, 2002, the Court promulgated a decision on
guarantees of due process and equal protection of the law these two consolidated cases partially granting the petition in
the proviso in Section 18 of Presidential Decree No. 1146, G.R. No. 138381 ("first petition") thereby reversing the
which proviso states that the dependent spouse shall not be Commission on Audit's (COA) disallowance of certain fringe
entitled to said pension if his marriage with the pensioner is benefits granted to GSIS employees. As a result, the Court
contracted within three years before the pensioner qualified ordered the refund of amounts representing fringe benefits
for the pension.The Government Service Insurance System
corresponding to those allowed in the first petition in favor of GSIS filed a comment2 to respondents' amendatory motion,
the respondents in G.R. No. 141625 ("second petition"). as directed by the Court in a resolution dated September 3,
2002. GSIS posited that the other benefits not passed upon
The benefits which the Court ordered to be refunded included in the main judgment should be understood by respondents
increases in longevity pay, children's allowance and as having been impliedly denied by this Court. It also sought
management contribution to the Provident Fund as well as clarification of our decision insofar as it declared that there
premiums for group personal accident insurance. On the was no identity of subject matter between the COA
other hand, the Court affirmed the COA disallowance of proceedings, from which the first petition stemmed, and
loyalty and service cash award as well as housing allowance respondents' claim under the second petition, which
in excess of that approved by the COA. Amounts emanated from an order of the GSIS Board of Trustees
corresponding to these benefits were previously deducted by ("Board"). As for the damages claimed by respondents, GSIS
GSIS from respondents' retirement benefits in view of the insists that it made the deductions in good faith for these
COA disallowance in the first petition. COA did not seek were done in accordance with COA directives.
reconsideration of the judgment ordering said refund, which
thus became final and executory. Respondents filed a reply3 to the comment of GSIS on
September 9, 2002.
On August 7, 2002, the respondents in the second petition,
all GSIS retirees, filed a motion for amendatory and Meanwhile, respondents filed a second motion, this time for
clarificatory judgment ("amendatory motion").1 They averred leave to file a motion for discretionary and partial
that we did not categorically resolve the issue raised in the execution4 ("motion for execution"). They prayed that GSIS
second petition, namely: whether or not the GSIS may be ordered to effect the refund, as finally adjudged in our
lawfully deduct any amount from their retirement benefits in decision, pending resolution of their amendatory motion as
light of Section 39 of Republic Act No. 8291. to the other deducted amounts. We granted the motion for
execution on September 3, 2002.
According to respondents, said provision of law clearly states
that no amount whatsoever could be legally deducted from Subsequently, on December 26, 2002, counsel for
retirement benefits, even those amounts representing COA respondents, Atty. Agustin Sundiam, filed a motion for entry
disallowances. They posit that we should have ordered and enforcement of attorney's lien5 ("motion for charging
refund not only of benefits allowed in the first petition, but all lien") and a supplement6 to this motion on January 10, 2003.
amounts claimed, regardless of whether or not these were He sought entry of a charging lien in the records of this case
allowed by the COA. These include items which were pursuant to Section 37 of Rule 138. He prayed for an order
correctly disallowed by the COA in the first petition, as well directing the GSIS to deduct, as his professional fees, 15%
as disallowed benefits under the second petition. The latter from respondents' refund vouchers since the GSIS was
consists of initial payment of productivity bonus, accelerated already in the process of releasing his clients' checks in
implementation of the new salary schedule effective August compliance with our judgment in the first petition. The
1, 1995, 1995 mid-year financial assistance and increase in payment scheme was allegedly authorized by the Board of
clothing, rice and meal allowances. Respondents further Directors of his clients, the GSIS Retirees Association, Inc.
insist that we should have awarded damages in their favor, (GRIA), through a board resolution7 that he has attached to
citing the GSIS' alleged bad faith in making the deductions. the motion.
Atty. Sundiam's motion for charging lien was opposed by Disability (PPD) benefits that GSIS supposedly paid to some
petitioner GSIS on the ground that it was through its efforts, of the respondents, but once again arbitrarily deducted from
and not Atty. Sundiam's, that the retirees were able to the amount which the Court ordered to be refunded.
obtain a refund.8 Meanwhile, the GRIA confirmed the
payment scheme it adopted with Atty. Sundiam and prayed In a minute resolution14 dated November 11, 2003, we
for its approval.9 denied the last motion for lack of merit. We likewise denied
with finality respondents' motion for reconsideration from the
Thereafter, on January 10, 2003, respondents filed another denial of said motion.15
manifestation and motion as well as supplement thereto,
claiming that GSIS was deducting new and unspecified sums We now resolve the matters raised by the parties.
from the amount it was refunding to respondents. These new
deductions purportedly pertain to another set of COA On the amendatory motion, it must be clarified that the
disallowances.10 question raised before this Court in the second petition was
the issue of the Board's jurisdiction to resolve respondents'
On January 21, 2003, respondents again filed a claim for refund of amounts representing deductions from
motion11 praying for the inclusion in the refundable amount their retirement benefits. What was assailed in the second
of dividends on the management contribution to the petition was the appellate court's ruling that the Board had
Provident Fund ("motion for payment of dividends"). jurisdiction over respondents' claim since there was no
Respondents claimed that the contribution, which amounted identity of subject matter between the proceedings then
to Fifty Million Pesos (P50M), was retained by GSIS for more pending before the COA and the petition brought by
than five years and thus earned a considerable sum of respondents before the Board. The Court of Appeals did not
income while under its control. GSIS declared and paid rule on the main controversy of whether COA disallowances
dividends on said contribution to incumbent officials and could be deducted from retirement benefits because the
employees, but refused to extend the same benefits to Board ordered the dismissal of respondents' claim for alleged
respondents/retirees. lack of jurisdiction, before it could even decide on the
principal issue.
On March 6, 2003, GSIS filed a joint comment12 to
respondents' two foregoing motions contending that the new Consequently, the only matter that was properly elevated to
deductions are legitimate. The deductions pertain to car loan this Court was the issue of whether or not the Board had
arrearages, disallowed employees' compensation claims and jurisdiction over respondents' demands. We did not resolve
the like. As for the dividends on the Provident Fund the issue of whether or not the deductions were valid under
contributions, respondents are not entitled to the same Section 39 of RA 8291, for the simple reason that the Board,
because while the first petition was pending, the as well as the appellate court, did not tackle the issue. The
contributions were not actually remitted to the fund but were doctrine of primary jurisdiction16 would ordinarily preclude us
withheld by COA pursuant to its earlier disallowance. from resolving the matter, which calls for a ruling to be first
made by the Board. It is the latter that is vested by law with
On October 2, 2003, respondents filed another motion13 for exclusive and original jurisdiction to settle any dispute arising
an order to compel the GSIS to pay dividends on the under RA 8291, as well as other matters related thereto.17
Provident Fund contributions pending resolution of their other
motions. They also sought refund of Permanent Partial
However, both the GSIS and respondents have extensively should now be settled specially as they involved pure
discussed the merits of the case in their respective pleadings questions of law. Furthermore, the pleadings of the
and did not confine their arguments to the issue of respective parties on file have amply ventilated their various
jurisdiction. Respondents, in fact, submit that we should positions and arguments on the matter necessitating prompt
resolve the main issue on the ground that it is a purely legal adjudication.
question. Respondents further state that a remand of the
case to the Board would merely result in unnecessary delay In Roman Catholic Archbishop of Manila v. Court of
and needless expense for the parties. They thus urge the Appeals,19 the Court likewise held that the remand of a case
Court to decide the main question in order to finally put an is not necessary where the court is in a position to resolve
end to the controversy. the dispute based on the records before it. The Court will
decide actions on the merits in order to expedite the
Indeed, the principal issue pending before the Board does settlement of a controversy and if the ends of justice would
not involve any factual question, as it concerns only the not be subserved by a remand of the case.
correct application of the last paragraph of Section 39, RA
8291. The parties agreed that the lone issue is whether COA Here, the primary issue calls for an application of a specific
disallowances could be legally deducted from retirement provision of RA 8291 as well as relevant jurisprudence on the
benefits on the ground that these were respondents' matter. No useful purpose will indeed be served if we remand
monetary liabilities to the GSIS under the said provision. the matter to the Board, only for its decision to be elevated
There is no dispute that the amounts deducted by GSIS again to the Court of Appeals and subsequently to this Court.
represented COA disallowances. Thus, the only question left Hence, we deem it sound to rule on the merits of the
for the Board to decide is whether the deductions are allowed controversy rather than to remand the case for further
under RA 8291. proceedings.

Under certain exceptional circumstances, we have taken The last paragraph of Section 39, RA 8291 specifically
cognizance of questions of law even in the absence of an provides:
initial determination by a lower court or administrative body.
In China Banking Corporation v. Court of Appeals,18 the Court SEC. 39. Exemption from Tax, Legal Process and Lien. -
held:
xxxxxxxxx
At the outset, the Court's attention is drawn to the fact that
since the filing of this suit before the trial court, none of the The funds and/or the properties referred to herein as well as
substantial issues have been resolved. To avoid and gloss the benefits, sums or monies corresponding to the benefits
over the issues raised by the parties, as what the trial court under this Act shall be exempt from attachment,
and respondent Court of Appeals did, would unduly prolong garnishment, execution, levy or other processes issued by
this litigation involving a rather simple case of foreclosure of the courts, quasi-judicial agencies or administrative bodies
mortgage. Undoubtedly, this will run counter to the avowed including Commission on Audit (COA) disallowances and from
purpose of the rules, i.e., to assist the parties in obtaining all financial obligations of the members, including his
just, speedy and inexpensive determination of every action pecuniary accountability arising from or caused or occasioned
or proceeding. The Court, therefore, feels that the central by his exercise or performance of his official functions or
issues of the case, albeit unresolved by the courts below, duties, or incurred relative to or in connection with his
position or work except when his monetary liability, x x x we are of the opinion that the exemption should be
contractual or otherwise, is in favor of the GSIS. liberally construed in favor of the pensioner. Pension in this
case is a bounty flowing from the graciousness of the
It is clear from the above provision that COA disallowances Government intended to reward past services and, at the
cannot be deducted from benefits under RA 8291, as the same time, to provide the pensioner with the means with
same are explicitly made exempt by law from such which to support himself and his family. Unless otherwise
deductions. Retirement benefits cannot be diminished by clearly provided, the pension should inure wholly to the
COA disallowances in view of the clear mandate of the benefit of the pensioner. It is true that the withholding and
foregoing provision. It is a basic rule in statutory application of the amount involved was had under section
construction that if a statute is clear, plain and free from 624 of the Administrative Code and not by any judicial
ambiguity, it must be given its literal meaning and applied process, but if the gratuity could not be attached or levied
without interpretation. This is what is known as plain- upon execution in view of the prohibition of section 3 of Act
meaning rule or verba legis.20 No. 4051, the appropriation thereof by administrative action,
if allowed, would lead to the same prohibited result and
Accordingly, the GSIS' interpretation of Section 39 that COA enable the respondents to do indirectly what they can not do
disallowances have become monetary liabilities of directly under section 3 of Act No. 4051. Act No. 4051 is a
respondents to the GSIS and therefore fall under the later statute having been approved on February 21, 1933,
exception stated in the law is wrong. No interpretation of the whereas the Administrative Code of 1917 which embodies
said provision is necessary given the clear language of the section 624 relied upon by the respondents was approved on
statute. A meaning that does not appear nor is intended or March 10 of that year. Considering section 3 of Act No. 4051
reflected in the very language of the statute cannot be as an exception to the general authority granted in section
placed therein by construction.21 624 of the Administrative Code, antagonism between the two
provisions is avoided. (Underscoring supplied)ςrαlαωlιbrαrÿ
Moreover, if we are to accept the GSIS' interpretation, then it
would be unnecessary to single out COA disallowances as The above ruling was reiterated in Tantuico, Jr. v.
among those from which benefits under RA 8291 are Domingo,24 where the Court similarly declared that benefits
exempt. In such a case, the inclusion of COA disallowances in under retirement laws cannot be withheld regardless of the
the enumeration of exemptions would be a mere surplusage petitioner's monetary liability to the government.
since the GSIS could simply consider COA disallowances as
monetary liabilities in its favor. Such a construction would The policy of exempting retirement benefits from
empower the GSIS to withdraw, at its option, an exemption attachment, levy and execution, as well as unwarranted
expressly granted by law. This could not have been the deductions, has been embodied in a long line of retirement
intention of the statute. statutes. Act No. 4051,25 which provides for the payment of
gratuity to officers and employees of the Insular Government
That retirement pay accruing to a public officer may not be upon retirement due to reorganization, expressly provides in
withheld and applied to his indebtedness to the government its Section 3 that "(t)he gratuity provided for in this Act shall
has been settled in several cases. In Cruz v. Tantuico, not be attached or levied upon execution."
Jr.,22 the Court, citing Hunt v. Hernandez,23 explained the
reason for such policy thus: The law which established the GSIS, Commonwealth Act No.
186 ("CA No. 186"),26 went further by providing as follows:
SEC. 23. Exemptions from legal process and liens. - No performance of his duties and are not incurred relative to his
policy of life insurance issued under this Act, or the proceeds work. The general policy, as reflected in our retirement laws
thereof, except those corresponding to the annual premium and jurisprudence, is to exempt benefits from all legal
thereon in excess of five hundred pesos per annum, when processes or liens, but not from outstanding obligations of
paid to any member thereunder, shall be liable to the member to the System. This is to ensure maintenance of
attachment, garnishment, or other process, or to be seized, the GSIS' fund reserves in order to guarantee fulfillment of
taken, appropriated, or applied by any legal or equitable all its obligations under RA 8291.
process or operation of law to pay any debt or liability of
such member, or his beneficiary, or any other person who Notwithstanding the foregoing, however, we find it necessary
may have a right thereunder, either before or after payment; to nonetheless differentiate between those benefits which
nor shall the proceeds thereof, when not made payable to a were properly disallowed by the COA and those which were
named beneficiary, constitute a part of the estate of the not.
member for payment of his debt.
Anent the benefits which were improperly disallowed, the
Presidential Decree No. 1146,27 which amended CA No. 186, same rightfully belong to respondents without qualification.
likewise contained a provision exempting benefits from As for benefits which were justifiably disallowed by the COA,
attachment, garnishment, levy or other processes. However, the same were erroneously granted to and received by
the exemption was expressly made inapplicable to respondents who now have the obligation to return the same
"obligations of the member to the System, or to the to the System.
employer, or when the benefits granted are assigned by the
member with the authority of the System."28 It cannot be denied that respondents were recipients of
benefits that were properly disallowed by the COA. These
The latest GSIS enactment, RA 8291,29 provides for a more COA disallowances would otherwise have been deducted
detailed and wider range of exemptions under Section 39. from their salaries, were it not for the fact that respondents
Aside from exempting benefits from judicial processes, it retired before such deductions could be effected. The GSIS
likewise unconditionally exempts benefits from quasi-judicial can no longer recover these amounts by any administrative
and administrative processes, including COA disallowances, means due to the specific exemption of retirement benefits
as well as all financial obligations of the member. The latter from COA disallowances. Respondents resultantly retained
includes any pecuniary accountability of the member which benefits to which they were not legally entitled which, in
arose out of the exercise or performance of his official turn, gave rise to an obligation on their part to return the
functions or duties or incurred relative to his position or amounts under the principle of solutio indebiti.
work. The only exception to such pecuniary accountability is
when the same is in favor of the GSIS. Under Article 2154 of the Civil Code,30 if something is
received and unduly delivered through mistake when there is
Thus, "monetary liability in favor of GSIS" refers to no right to demand it, the obligation to return the thing
indebtedness of the member to the System other than those arises. Payment by reason of mistake in the construction or
which fall under the categories of pecuniary accountabilities application of a doubtful or difficult question of law also
exempted under the law. Such liability may include unpaid comes within the scope of solutio indebiti.31
social insurance premiums and balances on loans obtained
by the retiree from the System, which do not arise in the
In the instant case, the confusion about the increase and Conformably, any fees due to Atty. Sundiam for his
payment of benefits to GSIS employees and executives, as professional services may be charged against respondents'
well as its subsequent disallowance by the COA, arose on retirement benefits. The arrangement, however, must be
account of the application of RA 6758 or the Salary covered by a proper agreement between him and his clients
Standardization Law and its implementing rules, CCC No. 10. under (2) above.
The complexity in the application of these laws is manifested
by the several cases that have reached the Court since its As to whether respondents are entitled to dividends on the
passage in 1989.32 The application of RA 6758 was made provident fund contributions, the same is not within the
even more difficult when its implementing rules were nullified issues raised before the Court. The second petition refers
for non-publication.33 Consequently, the delivery of benefits only to the legality of the deductions made by GSIS from
to respondents under an erroneous interpretation of RA 6758 respondents' retirement benefits. There are factual matters
gave rise to an actionable obligation for them to return the that need to be threshed out in determining respondents'
same. right to the payment of dividends, in view of the GSIS'
assertion that the management contributions were not
While the GSIS cannot directly proceed against respondents' actually remitted to the fund. Thus, the payment of dividends
retirement benefits, it can nonetheless seek restoration of should be the subject of a separate claim where the parties
the amounts by means of a proper court action for its can present evidence to prove their respective assertions.
recovery. Respondents themselves submit that this should be The Court is in no position to resolve the matter since the
the case,34 although any judgment rendered therein cannot material facts that would prove or disprove the claim are not
be enforced against retirement benefits due to the exemption on record.
provided in Section 39 of RA 8291. However, there is no
prohibition against enforcing a final monetary judgment In the interest of clarity, we reiterate herein our ruling that
against respondents' other assets and properties. This is only there is no identity of subject matter between the COA
fair and consistent with basic principles of due process. proceedings, from which the first petition stemmed, and
respondents' claim of refund before the Board. While the first
As such, a proper accounting of the amounts due and petition referred to the propriety of the COA disallowances
refundable is in order. In rendering such accounting, the per se, respondents' claim before the Board pertained to the
parties must observe the following guidelines: legality of deducting the COA disallowances from retirement
benefits under Section 39 of RA 8291.
(1) All deductions from respondents' retirement benefits
should be refunded except those amounts which may Finally, on respondents claim that the GSIS acted in bad faith
properly be defined as "monetary liability to the GSIS"; when it deducted the COA disallowances from their
retirement benefits, except for bare allegations, there is no
(2) Any other amount to be deducted from retirement proof or evidence of the alleged bad faith and partiality of the
benefits must be agreed upon by and between the parties; GSIS. Moreover, the latter cannot be faulted for taking
andcralawlibrary measures to ensure recovery of the COA disallowances since
respondents have already retired and would be beyond its
(3) Refusal on the part of respondents to return disallowed administrative reach. The GSIS merely acted upon its best
benefits shall give rise to a right of action in favor of GSIS judgment and chose to err in the side of prudence rather
before the courts of law. than suffer the consequence of not being able to account for
the COA disallowances. It concededly erred in taking this certification4 in his capacity as Administrative Services Officer
recourse but it can hardly be accused of malice or bad faith II/Property Supply Officer, assuming responsibility over all
in doing so. the properties issued to the outgoing Chief Aircraft
Maintenance Officer/PSO. Upon respondent's retirement on
WHEREFORE, in view of the foregoing, the April 16, 2002 June 30, 1994, however, BSP refused to release his
Decision in G.R. NOS. 138381 and 141625 is AMENDED. In P291,555.00 retirement benefits for failure to settle his
addition to the refund of amounts corresponding to benefits property accountabilities. According to BSP's Administrative
allowed in G.R. No. 138381, the GSIS is ordered to REFUND Services Department (ASD), respondent's remaining
all deductions from retirement benefits EXCEPT amounts unaccounted spare parts consist of 1,314 pieces worth
representing monetary liability of the respondents to the P1,007,263.59.5
GSIS as well as all other amounts mutually agreed upon by
the parties. Respondent filed a complaint6 with the Human Resources
Management Department (HRMD) of BSP against ASD for the
SO ORDERED. bank's refusal to release his retirement benefits, but HRMD
denied the same.7
Construction of Retirement Laws
On appeal8 by respondent to the COA, the latter rendered a
G.R. NO. 168964 - January 23, 2006] decision allowing the release of the retirement benefits. It
held that retirement gratuities cannot be withheld, deducted
BANGKO SENTRAL NG or applied to the indebtedness of an employee to the
PILIPINAS, Petitioner, v. COMMISSION ON AUDIT & government without his/her consent. The dispositive portion
RECARREDO S. VALENZUELA, Respondents. thereof, reads:

DECISION Wherefore, premises considered, the instant claim is given

due course and the payment of the subject amounts to the
YNARES-SANTIAGO, J.: herein petitioner may now be allowed without prejudice to
any action for recovery of claimant's accountabilities, if
The instant petition for certiorari seeks to set aside the warranted.9
December 29, 2003 Judgment1 of the Commission on Audit
(COA) in Decision No. 2003-163, which allowed the release BSP filed a motion for reconsideration contending that since
of respondent Recarredo S. Valenzuela's retirement benefits; respondent (1) assumed responsibility effective September
as well as its July 21, 2005 Resolution2 denying petitioner 19, 1992, over all the properties under the custody of the
Bangko Sentral Ng Pilipinas' (BSP) motion for former Aircraft Maintenance Chief;10 and (2) affixed his
reconsideration. signature11 in the list of unaccounted properties,12 as of
February 28, 1995, he thereby admitted his indebtedness to
On March 1, 1990, respondent was employed by the defunct BSP. Invoking the case of Villanueva v. Tantuico, Jr.,13 BSP
Air Transportation Unit (ATU) of BSP's Security Investigation averred that compensation should take place between it and
and Transportation Department (SITD). As such, he assumed respondent since they are both creditors and debtors in their
direct accountability over the spare parts and equipment of own right.
BSP's aircrafts.3 On July 20, 1993, he executed a
On July 21, 2005, the COA denied BSP's motion for That the retirement pay accruing to a public officer may not
reconsideration.14 Hence, BSP filed the instant petition. be withheld and applied to his indebtedness to the
government is settled x x x.
The issue to be resolved is whether or not BSP may validly
withhold respondent's retirement benefits and unilaterally The case of Cruz,16 citing Hunt v. Hernandez, explained the
apply the same to his indebtedness to the government. reason for such policy in this wise:

The Court rules in the negative. x x x we are of the opinion that the exemption should be
liberally construed in favor of the pensioner. Pension in this
In Cruz v. Tantuico,15 it was held that retirement benefits case is a bounty flowing from the graciousness of the
accruing to a public officer may not, without his consent, be Government intended to reward past services and, at the
withheld and applied to his indebtedness to the government. same time, to provide the pensioner with the means with
In the said case, the National Treasurer withheld a portion of which to support himself and his family. Unless otherwise
the petitioner's retirement benefits to answer for losses clearly provided, the pension should inure wholly to the
arising from her encashment of falsified treasury warrants. benefit of the pensioner x x x.
In setting aside the directive of the Treasurer, the Court
explained that - The above ruling was reiterated in Tantuico, Jr. v.
Domingo,17 and Government Service Insurance System v.
x x x no negligence attended the petitioner's encashment of Commission on Audit,18 where the Court held that benefits
the treasury warrants. Even assuming that she could be held under retirement laws cannot be withheld regardless of the
liable for non-compliance with or violation of some rule or employee's monetary liability to the government. Retirement
regulation, this Court agrees with the petitioner that Section laws are liberally interpreted in favor of the retiree because
624 of the Revised Administrative Code cannot be construed the intention is to provide for the retiree's sustenance and
to authorize a deduction of the value of the treasury comfort when he is no longer capable of earning his
warrants from her retirement benefits. Said section provides: livelihood.19

Section 624. Retention of salary for satisfaction of Moreover, compensation or set off between respondent's
indebtedness. - When any person is indebted to the retirement benefits and his alleged liability to BSP cannot be
Government of the Philippine Islands (or Government of the allowed under Section 21, Chapter 4, Subtitle-B (Commission
United States), the Insular Auditor may direct the proper on Audit), Book V of the Revised Administrative Code of
officer to withhold the payment of any money due him or his 1987, which provides:
estate, the same to be applied in satisfaction of such
indebtedness. Sec. 21. Retention of Money for Satisfaction of Indebtedness
to the Government. - When any person is indebted to any
The Solicitor General, in his comment, is in agreement with government agency, the Commission may direct the proper
the petitioner that her retirement pay may not be withheld officer to withhold the payment of any money due such
by administrative fiat to answer for the shortage incurred person or his estate to be applied in satisfaction of his
while in office [Rollo, p. 99.] This has also been the indebtedness.
interpretation applied by the respondent COA Acting
Secretary in similar cases [Rollo, pp. 62-63.]
The aforequoted provision originated from Section 624 of the consents to such retention; or (2) a competent court so
Revised Administrative Code of 1917. In construing Section directs, thus'
624, the Court held in Villanueva v. Tantuico, Jr.,20 that the
"indebtedness" contemplated therein pertains to one that is Sec. 265. Retention of salary for the satisfaction of
acknowledged by the employee or one that is adjudged by indebtedness to the government. - When any person is
the court. Absent any of these two circumstances, no indebted to the Government of the Philippines or to any
compensation under Article 1278 of the Civil Code may be government-owned or controlled corporation or to any other
had, thus' self-governing board, commission or agency of the
government, the COA may direct the proper officer to
While Section 624 of the Revised Administrative Code does withhold the payment of any money due him or his estate,
indeed authorize the set-off of a person's indebtedness to the the same to be applied in satisfaction of such indebtedness
Government against "any money due him or his estate to be (Sec. 37, PD 114521 ). However, the retention of the
applied in satisfaction of such indebtedness," that retirement gratuity of a person to satisfy his
indebtedness must be one that is admitted by the alleged indebtedness to the government may be resorted to
debtor or pronounced by final judgment of a competent only if the person admits his indebtedness and
court. In such a case, the person and the Government are in consents to the retention or when a competent court
their own right both debtors and creditors of each other, and so directs. (Emphasis supplied)cralawlibrary
compensation takes place by operation of law in accordance
with Article 1278 of the Civil Code. Absent, however, any The COA correctly debunked the averment that respondent
such categorical admission by an obligor or final admitted his indebtedness when he issued a certification
adjudication, no legal compensation can take place, as this assuming responsibility over the properties turned over by
Court has already had occasion to rule in an early case. the former Aircraft Maintenance Chief.22 To warrant the
Unless admitted by a debtor himself, the conclusion that he application of set off under Article 1278 of the Civil Code, the
is in truth indebted to the Government cannot be definitely debtor's admission of his obligation must be clear and
and finally pronounced by a Government auditor, no matter categorical and not one which merely arise by inference or
how convinced he may be from his examination of the implication from the customary execution of official
pertinent records of the validity of that conclusion. Such a documents in assuming the responsibilities of a predecessor,
declaration, that a government employee or officer is indeed as in the instant case. Neither would respondent's signature
indebted to the Government, if it is to have binding in the list of unaccounted properties as of February 28, 1995
authority, may only be made by a court. That determination operate as an acknowledgement of an obligation. Suffice it to
is after all, plainly a judicial, not an administrative function. state that said signature alone hardly satisfies the requisite
No executive officer or administrative body possesses such a open and direct recognition of an obligation that would justify
power. the diminution of retirement benefits. There must be an
independent evidence showing the employee's intention to
In the same vein, Section 265 of the Government Accounting unmistakably recognize his indebtedness which was never
and Auditing Manual explicitly limits the power of COA to shown in the present controversy. On the contrary,
retain the retirement benefits of a government employee for respondent categorically stated in his February 9, 1999 letter
the purpose of satisfying his indebtedness only to instances to the BSP that he never admitted any indebtedness nor
where (1) the employee admits his indebtedness and consented to the retention of his benefits by the bank.23
Furthermore, even assuming that the February 28, 1995 list The P291,555.00 retirement gratuity due respondent consists
of unaccounted items bearing the signature of respondent of unused leave credits (P39,555.00), separation incentive
can be construed as an admission of indebtedness, still, said benefits (P112,000.00), and the amount due under the
purported admission cannot extend to the alleged unlocated provident fund (P140,000.00).28 We find no merit in BSP's
1,314 spare parts/furnitures/tools with an acquisition cost of claim that separation incentive benefits cannot be interpreted
P1,007,263.59, for which respondent is being held as part of respondent's retirement benefits. The grant
responsible. This is so because the latter items were never thereof in favor of retirees is authorized by Republic Act No.
shown to be included in the February 28, 1995 inventory 7653 or "The New Central Bank Act," in addition to the
signed by respondent. From the initial 10,120 items with a existing gratuities enjoyed by the employees. Section 134
total acquisition cost of P47,802,136.82, respondent's thereof provides:
alleged accountability was trimmed down to 1,314 spare
parts/furnitures/tools with an acquisition cost of SEC. 134. Separation Benefits. - Pursuant to Section 15 of
P1,007,263.59.24 It is doubtful, however, whether the latter this Act, the Monetary Board is authorized to provide
items are included in the February 28, 1995 list inasmuch as separation incentives, and all those who shall retire or be
BSP never reconciled these inventories. Hence, the amount separated from service on account of reorganization under
allegedly owed by respondent to BSP are contestable and the proceeding section shall be entitled to such incentives,
inconclusive. It cannot thus qualify as a "debt" for which shall be in addition to all gratuities and benefits to
compensation or set off to be operative under Article which they may be entitled under existing laws. (Emphasis
127925 of the Civil Code. At best, said amount is a mere added)
"claim" that would not make one a creditor of the other. As
explained by the Court in E.G.V. Realty Dev't . Corp. v. Court As to the provident fund, BSP cannot successfully assert a
of Appeals:26 paramount lien thereon because the provision invoked by it
contemplate of losses arising from "offenses" and "debts."
Compensation or offset takes place by operation of law when Section 5, Article IV of the Rules and Regulations Governing
two (2) persons, in their own right, are creditor and debtor of The Bangko Sentral Ng Pilipinas Provident Fund, states:
each other. For compensation to take place, a distinction
must be made between a debt and a mere claim. A debt is a Section 5 - Bank's Lien
claim which has been formally passed upon by the highest
authority to which it can in law be submitted and has been The Bank shall have a first and paramount lien upon the
declared to be a debt. A claim, on the other hand, is a debt amount to which the erring member is entitled as stated in
in embryo. It is mere evidence of a debt and must pass thru the preceding Section to cover all losses, costs, and
the process prescribed by law before it develops into what is expenses which the Bank may sustain through his
properly called a debt. dishonesty, defalcation, theft, embezzlement or falsification
and other similar offenses.
Nevertheless, while the BSP cannot directly proceed against
respondent's retirement benefits, it can seek restoration of The same lien shall also apply for any amount due to a
its claim by means of a proper court action for its recovery. member to cover any debt due to the Bank or the Fund.29
Verily, there is no prohibition against enforcing a final
monetary judgment against respondent's other assets and In the instant case, respondent was neither found guilty of
properties.27 any offense nor conclusively established to be indebted to
BSP. Hence, the latter's assertion of first and paramount lien JASMIN, ALFONSO ANGELES, MACACUNA PANGANDAMAN,
over the amount due respondent under the provident fund, ROSALITA MAUNA, ROMEO PADILLA, ASCENSION PADILLA,
must fail. CRISPULO PADILLA, VIRGILIO DEJERO, MEDARDO ILAO,
ROSITA SOMERA, ARMANDO CRUZ, CATALINO DABU,
WHEREFORE, the petition is DENIED. The December 29, FRANCISCO VILLARAIZ, NORMA JUMILLA, KENNEDY BASA,
2003 Judgment of the Commission on Audit in Decision No. and ARMANDO MENDOZA, intervenors.
2003-163 which allowed the release of respondent Recarredo
S. Valenzuela's retirement benefits; and its July 21, 2005 ANICITA S. BALUYUT, ANTONINO D. EDRALIN, EVELYN A.
ENRIQUEZ, MA. VICTORIA L. JACOBO, DANIEL M. MANAMTAM,
Resolution denying petitioner Bangko Sentral Ng Pilipinas'
JESSIE C. MANRIQUE, ENCARNACION T. RADAZA, and MARIO
motion for reconsideration are AFFIRMED.
P. RUIVIVAR, intervenors.
SO ORDERED.
AMOR T. MEDINA and FELIX L. POLIQUIT, intervenors.
Right to Reinstatement and Back Salary Leven S. Puno for petitioners.
G.R. No. 102232 March 9, 1994 The Solicitor General for respondents.
VIOLETA ALDOVINO, ALI ALIBASA, FELIX BALINO, DIONISIO
BALLESTEROS, JOSE N. BALEIN, JR., FREDDIE CAUTON, JANE
CORROS, ROBERTO CRUZ, TRINIDAD DACUMOS, ANGELITA
BELLOSILLO, J.:
DIMAPILIS, ANDREA ESTONILO, EFREN FONTANILLA, MARY
PAZ FRIGILLANA, MANUEL HENSON, SAMUEL HIPOL,
MERLENE IBALIO, MAGDALENA JAMILLA, ALEXANDER ASSERTING that their plight is similar to petitioners' in Mandani
JUSTINIANI, ROMULO MIRADOR, JULIO MIRAVITE, DANTE v. Gonzales,1 and in the consolidated cases of Abrogar v. Garrucho,
NAGTALON, CLARITA NAMUCO, ALICIA ORBITA, ANGELITA Jr.,
PUCAN, MYRNA P. SALVADOR, LIBRADA TANTAY, and and Arnaldo v. Garrucho, Jr.,  2 herein petitioners and intervenors
ARACELI J. DE VEYRA, petitioners, seek reinstatement and payment of back wages.
vs.
SECRETARY RAFAEL ALUNAN III, DEPARTMENT OF TOURISM Section 29 of Executive Order No. 120, which took effect upon its
and SECRETARY GUILLERMO M. CARAGUE, DEPARTMENT OF approval on 30 January 1987, reorganizing the then Ministry of
BUDGET AND MANAGEMENT, respondents. Tourism, provides that incumbents whose positions are not included
in the new position structure and staffing pattern or who are not
JOSEPHINE G. ANDAYA, ROSALINDA T. ATIENZA, JOSE M. reappointed are deemed separated from the service. Pursuant
BALDOVINO, JR., ASUNCION C. BRIONES, RIZALINA P. thereto, the then Ministry of Tourism (MOT, now Department of
ESPIRITU, MARIBELLE A. GARCIA, ABDULIA T. LANDINGIN, Tourism, DOT) issued various office orders and memoranda declaring
FLORITA O. OCAMPO, ROLANDO SISON, LOURDES V. TAMAYO, all positions thereat vacant,3 and effecting the separation of many of
and ROLANDO VALDEZ, intervenors. its employees,4 which led to the Mandani, Abrogar and Arnaldo cases,
as well as the instant petition.
ERLINDA PIZA, ELEONOR SAGNIT, FIDEL SEVIDAL,
CONCEPCION TIMARIO, ELOISA ALONZO, ANGELITO DELA In Mandani, we declared null and void all office orders and
CRUZ, ROLANDO C. CAGASCA, LYNIE ARCENAS, MARIA EMMA memoranda issued pursuant to E.O. 120 and directed "public
respondents or their successors . . . to immediately restore the 6 August 1991) and Arnaldo (filed 7 January 1991 and decided 6
petitioners to their positions without loss of seniority rights and with August 1991), they filed this petition and the interventions only in
back salaries computed under the new staffing pattern from the dates October 1991, and February, March, May and July 1992, or more than
of their invalid terminations at rates not lower than their former four (4) years later, hence, laches has set in. In reply, petitioners and
salaries."5 intervenors explain —

In Abrogar and Arnaldo, we ordered the reinstatement of petitioners . . . since the time these DOT employees were illegally
"to their former positions without loss of seniority rights and with back dismissed in May, 1987, most of them returned to the
salaries computed under the new staffing pattern from the dates of far away provinces of their origin because they became
their invalid dismissals at rates not lower than their former salaries, jobless. It was only by the slow and unreliable
provided, however, that no supervening event shall have occured communication of word of mouth that they came to
which would otherwise disqualify them for such reinstatement, and know much later on that they are (sic) entitled to be
provided, further, that whatever benefits they may have received from reinstated to the DOT . . . 8
the Government by reason of their termination shall be reimbursed
through reasonable salary deduction."6 The doctrine of laches is "principally a question of inequity of
permitting a claim to be enforced, this inequity being founded on some
Herein petitioners and intervenors claiming that they should not be change in . . . the relation of parties."9 In the case at bar, equity, if ever
deprived of the relief granted to their former co-employees plead for invoked, must lean in favor of petitioners and intervenors who were
reinstatement "without loss of seniority rights and with back salaries unjustly injured by public respondents' unlawful acts. The prejudice
computed under the new staffing pattern from dates of their invalid from the high-handed violation of the rights of petitioners and
termination at rates not lower than their former salaries."7 intervenors resulting in their loss of employment is far more serious
than the inconvenience to public respondents in rectifying their own
Decisive in this recourse is the determination of whether the mistakes.
separation of herein petitioners and intervenors from service was
pursuant to office orders and memoranda declared void in Mandani. Moreover, petitioners and intervenors cannot be deemed to have slept
on their rights considering, as we should, the
Except for petitioners Samuel Hipol, Jane Corros and Myrna following unrebutted allegations in the main petition:
Salvador, intervenors Concepcion Timario, Efren Fontanilla,
Ascension Padilla and Evelyn Enriquez, public respondents do not 7. Petitioners protested their illegal termination from the
dispute that petitioners and intervenors were unseated from the then DOT. Many of them questioned their termination with
Ministry of Tourism, pursuant to office orders and memoranda issued the Department of Labor and Employment where they
under E.O. No. 120. Public respondents nevertheless pray for the filed a Complaint against the DOT and its top officials
denial of the petition not only because petitioners and intervenors for illegal dismissal. . . . Some of them questioned their
failed to exhaust administrative remedies and that their claims are illegal termination before the Civil Service Commission.
barred by laches, but also in view of the disruption of the present
organizational set-up if reinstatement is directed. 8. Many of petitioners joined a picket and
demonstration held by illegally terminated employees
The Solicitor General argues that while petitioners and intervenors of the DOT before its office at the DOT building at the
(except petitioners Samuel Hipol, Jane Corros and Efren Fontanilla) Luneta Park.
were dismissed contemporaneously with their colleagues
in Mandani (filed 3 June 1987 and decided 4 June 9. Petitioners were forced to receive their separation or
1990), Abrogar (filed 31 October 1990 and decided retirement benefits from the DOT, but all under protest.
 The others continued to fight their cases with the the United States Supreme Court in Southern Pacific
Department of Labor and Employment even if they got vs. Bogert, relevant and persuasive, and We quote;
their separation and/or retirement benefits.
The essence of laches is not merely lapse of time. It is
xxx xxx xxx essential that there be also acquiescence in the alleged
wrong or lack of diligence in seeking a remedy. Here
11. After the finality of this Decision (Mandani) . . . plaintiffs, or others representing them, protested . . .
many other terminated employees of the DOT wrote to and ever since they have . . . persisted in the diligent
then DOT Secretary Peter D. Garrucho, Jr., as the pursuit of a remedy . . . Where the cause of action is of
successor-in-interest of former Sec. Jose U. Gonzales, such a nature that a suit to enforce it would be brought
and DBM Secretary Guillermo Carague, asking that on behalf, not only of the plaintiff, but of all persons
following the Decision in this Mandani similarly situated, it is not essential that each such
vs. Gonzalez case and being similarly situated as the person should intervened (sic) in the suit brought in
twenty-eight (28) petitioners therein, that they be order that he be deemed thereafter free from the
reinstated to their former or equivalent positions in the laches which bars those who sleep on their
DOT and/or to be paid their back wages. Then . . . DOT rights (citations omitted).
Secretary Garrucho and DBM Sec. Carague never
responded to these letters and did not reinstate and/or xxx xxx xxx
pay any of their back wages.
This Court, applying the principle of equity, need not be
xxx xxx xxx bound by the rigid application of the law, but rather its
action should conform to the conditions or exigencies
16. Following the Decision of this Honorable Court in to a given problem or situation in order to grant a relief
the Mandani vs. Gonzalez case and its Resolution in that will serve the ends of justice.
the consolidated cases of Abrogar
vs. Garrucho and Arnaldo vs. Garrucho, petitioners To paraphrase then Chief Justice John Edwin Marshall
made representations with the DOT to be reinstated of the United States Supreme Court, let us to (do)
and/or paid their back complete justice and not do justice by halves ("The
wages . . . . 10 court of equity in all cases delights to do complete
justice and not by halves." Marshall, C. J. — Knight
Neither could petitioners and intervenors be faulted for not joining in vs. Knight, 3 P. Wms. 331, 334; Corbet v. Johnson, 1
the previous petitions because, as we held in Cristobal Brock, 77, 81 — both cited in Hefner, et
v. Melchor (No. L- 43203, 29 July 1977; 78 SCRA 175, 183, 187) — al. vs. Northwestern Mutual Life Insurance Co., 123
U.S., 309, 313).
More importantly, Cristobal could be expected —
without necessarily spending time and money by going We emphasize that prescription was never raised here as an issue; at
to court — to relie upon the outcome of the case filed most, it is deemed waived. In Fernandez v. Grolier International,
by his co-employees to protect his interests considering Inc., 11 we stated:
the similarity of his situation to that of the plaintiffs
therein and the identical relief being sought. On this In the case of Director of Lands v. Dano (96 SCRA
point, We find a statement of Justice Louis Brandeis of 161, 165), this Court held that "inasmuch as petitioner
 had never pleaded the statute of limitations, he is lifeblood, of each petitioner/intervenor is involved), it is better to
deemed to have waived the same". resolve the issues on the basic merits of the case instead of applying
the rule on prescription which the private respondent waived when it
In the cited case of Directors of Lands v. Dano, the Director of Lands, was not pleaded." Anyhow, it was public respondents who created the
who was similarly situated as public respondents herein who problem of petitioners and intervenors by illegally abolishing their
represent the Government, was deemed to have waived the defense positions and terminating their services in outrageous disregard of the
of prescription "inasmuch as petitioner had never pleaded the statute basic protection accorded civil servants, hence our repeated
of limitations." pronouncement that it was unconstitutional.

The matter of prescription, we reiterate, may not be considered at this An unconstitutional act is not a law; it confers no rights; it imposes no
late stage, not only because it was never raised and therefore now duties; it affords no protection; it creates no office; it is, in legal
foreclosed, but more importantly, because it must yield to the higher contemplation, inoperative, as if it had not been passed. It is therefore
interest of justice. Incidentally, it is only in the dissent that the question stricken from the statute books and considered never to have existed
of prescription is introduced. Not even the Government raised it. at all. Not only the parties but all persons are bound by the declaration
of unconstitutionality which means that no one may thereafter invoke
In 1977, we in fact relaxed the rule on prescription in Cristobal it nor may the courts be permitted to apply it in subsequent cases. It
v. Melchor12 to give way to a determination of the case on the merits is, in other words, a total nullity. 16 Plainly, it was as if petitioners and
where, like in this case, "[i]t was an act of the government through its intervenors were never served their termination orders and,
responsible consequently, were never separated from the service, The fact that
officials . . . which contributed to the alleged delay in the filing of . . . they were not able to assume office and exercise their duties is
complaint for reinstatement." But, we need not go back that far. On 15 attributable to the continuing refusal of public respondents to take
August 1991, the Court En Banc granted the related petition in them in unless they first obtained court orders, perhaps, for
intervention of Alberto A. Peralta, government budgetary and accounting purposes. Under the
et al., 13 in the consolidated cases of Abrogar v. Garrucho, circumstances, the more prudent thing that public respondents could
and Arnaldo v. Garrucho, even if filed on 1 August 1991 or two have done upon receipt of the decision in Mandani, if they were
months after the four-year prescriptive period, which lapsed on the earnest in making amends and restoring petitioners and intervenors to
14th and 28th of May 1991. As we ruled in Cristobal v. Melchor, 14 "it their positions, was to inform the latter of the nullification of their
is indeed the better rule that courts, under the principle of equity, will termination orders and to return to work and resume their functions.
not be guided or bound strictly by the statute of limitations or the After all, many of them were supposed to be waiting for instructions
doctrine of laches when to do so manifest wrong and injustice would from the DOT because in their termination orders it promised to
result." directly contact them by telephone, telegram or written notice as soon
as funds for their separation would be available. 17
The principle that prescription does not run against the State, which
contemplates a situation where a private party cannot defeat the claim Furthermore, the representations to DOT made by petitioners and
of the State by raising the defense of prescription, is inapplicable intervenors for their reinstatement partook of the nature of an
because in this case the private parties are the ones filing a suit administrative proceeding, and public respondents also failed to raise
against the State. Consequently, we reiterate our pronouncement the issue of prescription therein. As already adverted to, that issue
in Fernandez v. Grolier International, Inc.,15 that "[i]t is true that there was never raised before us. In reciting the alleged instances of delay
are exceptions to the rule that an action will not be declared to have in bringing up this suit, the Solicitor General simply referred to laches,
prescribed if prescription is not expressly invoked (Garcia vs. Mathis, not prescription. Since this case is an original action, and if we treat
100 SCRA 250). However, where considerations of substantial justice the petition and interventions as ordinary complaints, the failure of
come in (as in this case when the very employment, and therefore the public respondents to raise the issue of prescription in their comments
cannot be interpreted any less than a waiver of that defense. For, The Court disregards the questions raised as to
defenses and objections not pleaded either in a motion to dismiss or procedure, failure to exhaust administrative remedies,
in the answer are deemed waived, except the failure to state a cause the standing of certain parties to sue (this was raised
of action which may be alleged in a later pleading, if one is by the Civil Service Commission in G.R. No. 86241,
permitted. 18 and failure to exhaust administrative remedies was
raised in G.R. Nos. 81954 and 81917 by the Solicitor
Above all, what public respondents brought up was the doctrine of General), and other technical objections, for two
laches, not prescription; and laches is different from prescription. The reasons, "[b]ecause of the demands of public interest,
defense of laches applies independently of prescription. While including the need for stability in the public service"
prescription is concerned with the fact of delay, laches is concerned (Sarmiento III v. Mison, G.R. No. 79974, December 17,
with the effect of delay. Prescription is a matter of time; laches is a 1987, 153 SCRA 549, 551-552) and because of the
question of inequity of permitting a claim to be enforced, this inequity serious implications of these cases on the
being founded on some change in the condition of the property or the administration of the Philippine civil service and the
relation of the parties. Prescription is statutory; laches is not. Laches rights of public servants.
applies in equity, whereas prescription applies at law. Prescription is
based on fixed time, laches is not. 19 In any case, it can be said that On the argument that existing organizational set-up would be
the prescriptive period was tolled with the filing of the termination disrupted if reinstatement be directed, we need only reiterate our 18
cases before the Department of Labor and Employment and the Civil October 1990 Resolution in Mandani that —
Service Commission, the pendency of which is acknowledged in the
Comment and Memorandum of public respondents. An erring head of a Department, Bureau, or Office
cannot avoid reinstatement, payment of back pay, and
Incidentally, even the picketing of the premises and the placards other acts of compliance with the orders of this Court
demanding their immediate reinstatement could not be any less than by interposing changes effected subsequent to his
written demands sufficient to interrupt the period of prescription. As unlawful acts and claiming that such changes make it
we noted earlier, "[a]fter the finality of this Decision (Mandani) . . . difficult to obey this Court's orders.
many other terminated employees of the DOT wrote to then DOT
Secretary Peter D. Garrucho, Jr . . . and DBM Secretary Guillermo The basic principle to be applied whenever the Court
Carague asking that following the Decision in this Mandani declares an administrative official to have acted in an
vs. Gonzalez case and being similarly situated as the twenty-eight unlawful manner is for that official to undo the harmful
(28) petitioners therein . . . they be reinstated to their former or effects of his illegal act and to accord to the aggrieved
equivalent positions in the DOT and/or to be paid their back wages." parties restoration or restitution in good faith to make
But "[t]hen . . . DOT Secretary Garrucho and DBM Sec. Carague up for the deprivations which may have been suffered
never responded to these because of his act. 23
letters," 20 so that it may be said that the period that was interrupted
never started to run again against petitioner and intervenors. Petitioners and intervenors, who are similarly situated as their
counterparts in Mandani, Abrogar and Arnaldo, deserve no less than
The requirement of prior resort to administrative remedies is not an equal treatment.
absolute rule and this did not bar direct access to this Court in the
analogous cases of Dario v. Mison, 21 and Mandani The Solicitor General takes exception to petitioner Samuel Hipol who
22
v. Gonzalez,   thus — was separated from the service under an order of 19 May 1986 issued
pursuant to Sec. 2, Art. III, of Proclamation No. 3, and not under E.O.
No. 120.24 In reply, petitioner Hipol admits that he was "in the process
of working for his reinstatement/reappointment at the DOT when . . . memoranda which directed the separation of petitioners and
all positions thereat were declared vacant . . ." 25 Since his separation intervenors were annulled, hence in legal contemplation did not exist,
from service was not under void orders issued pursuant to E.O. No. the effect is, as if the termination did not occur. However, since the
120 and, worse, he was not even an incumbent when E.O. No. 120 determination in this case is limited only to the extent of the nullity of
was issued, Hipol could not be considered as in the same situation as said orders and memoranda, the reinstatement of Salvador, Padilla
the petitioners in Mandani, Abrogar and Arnaldo. and Enriquez cannot be ordered in the instant proceeding.

A parallel case is that of intervenor Concepcion Timario who, The Solicitor General also seeks dismissal of the petition and
according to the Solicitor General, resigned effective 28 May 1987 intervention against intervenors Rizalina T. Espiritu, Abdulia T.
and was not separated under any of the invalid orders. 26 Intervenor Landingin, Medardo Ilao, Rosita Somera, Armando Cruz, Catalino
Timario however contends that she is entitled to relief because her Dabu, Francisco Villaraiz, Norma Jumilia, Kennedy Basa, Rolando G.
courtesy resignation was accepted on 9 June 1987 or during the Cagasca and Alfonso Angeles because they were already reinstated.
period positions were declared vacant pursuant to MOT Office Order However, because of the unrefuted allegation that these employees
No. 9-87. 27 It is significant to note that Timario's letter of resignation were not yet paid their respective back wages, then to that extent,
cited "professional reasons" as cause for her abdication 28 which, their petitions must be granted.
obviously, pertains to the nature of her work. Moreover, conspicuously
absent is the customary order requiring the filing of courtesy In computing back wages, we cannot blindly accept the allegation of
resignations. Timario may not be permitted to characterize, by way of petitioners and intervenors that since their separation from the service
self-serving assertions, that her resignation was merely a courtesy in 1987, or about seven (7) years ago, they have been jobless hence
resignation pursuant to any of the voided office orders or memoranda. entitled to full back wages. Conformably with existing jurisprudence,
the award of back wages should not exceed a period of five (5)
The claim of the Solicitor General that petitioners Jane Corros and years. 35
Efren Fontanilla were not employees of the Ministry of Tourism
because their names did not appear in the regular plantilla of the In the final analysis, the dissent admits that petitioners and
Ministry of Tourism,29 is specious since the listing of names in the intervenors truly deserve the reliefs they pray for except that their
plantilla is not a conclusive evidence of employment. Nonetheless, in cause of action has allegedly prescribed. Shall we now frustrate their
view of the incessant allegation of the Solicitor General that Corros rightful claims on a ground that was never raised, nor even hinted at,
and Fontanilla were not employees of the Ministry, and considering by public respondents in the entire proceeding? That would be
the photocopies of Fontanilla's appointment papers and termination antithetic to our concept of social justice; at the very least, it is
order submitted by him, 30 as well as the bare assertion of petitioner subversive of the rudiments of fairplay.
Corros that she was for 11 years PRO I in the Licensing Division of
the Ministry and that her name could not be found in the plantilla WHEREFORE, the instant petition is GRANTED. Petitioners Violeta
because she is now Jane Ombawa in view of her marriage, 31 the fact Aldovino, Ali Alibasa, Felix Balino, Dionisio Ballesteros, Jose N.
of employment should be threshed out first in a proper forum as this Balein, Jr., Freddie Cauton, Roberto Cruz, Trinidad Dacumos,
Court is not a trier of facts. Angelita Dimapilis, Andrea Estonilo, Mary Paz Frigillana, Manuel
Henson, Merlene Ibalio, Magdalena Jamilla, Alexander Justiniani,
The Solicitor General contends that since petitioner Myrna Salvador Romulo Mirador, Julio Miravite, Dante Nagtalon, Clarita Namuco,
was a casual employee,32 intervenor Ascension Padilla was a Alicia Orbita, Angelita Pucan, Myrna P. Salvador,
temporary appointee whose appointment expired 20 February Librada Tantay, and Araceli De Veyra, and intervenors Josephine G.
1987,33 and intervenor Evelyn Enriquez was also a temporary Andaya, Rosalinda T. Atienza, Jose M. Baldovino, Jr., Asuncion C.
appointee, 34 their appointments are terminable at the pleasure of the Briones,
appointing authority. Considering however that the office orders and Maribelle A. Garcia, Florita O. Ocampo, Rolando Sison, Lourdes B.
Tamayo, Rolando Valdez, Erlinda Piza, Eleonor Sagnit, Fidel Sevidal, DECISION
Eloisa Alonzo, Angelito Dela Cruz, Lynie Arcenas, Maria Emma
Jasmin, Macacuna Pangandaman, Rosalia Mauna, Romeo Padilla, CARPIO, J.:
Ascencion Padilla, Crispulo Padilla, Virgilio Dejero, Armando
Mendoza, Anicita S. Baluyut, Antonio D. Edralin, Evelyn A. Enriquez, The Case
Ma. Victoria L. Jacobo, Daniel M. Manamtam, Jessie C. Manrique,
Encarnacion T. Radaza, Mario P. Ruivivar, Amor T. Medina, and Felix This Petition for Review 1 assails the 31 July 1996 Decision2 and 29 February
L. Poliquit, are ordered REINSTATED immediately to their former 2000 Resolution of the Court of Appeals in CA-G.R. SP Nos. 37794-99 and
positions without loss of seniority rights and with back salaries SP Nos. 37800-05. The Court of Appeals dismissed the Petition
computed under the new staffing pattern from the dates of their invalid for Certiorari filed by petitioners and affirmed the Resolutions issued by the
dismissals at rates not lower that their former salaries but not to Civil Service Commission.
exceed a period of five (5) years, provided, however, that no
supervening event shall have occured which would otherwise The Facts
disqualify then from such reinstatement, and provided, further, that
whatever benefits they may have received from the Government by
Petitioners Yolanda Brugada, Angelina Corpuz, Evelyn Escano, Shirley
reason of their termination shall be reimbursed through reasonable
Garma, Dedaica Jusay, Parsima Leria, Sonia C. Mahinay, Adela Solo, Elsie
salary deductions.
Somera, Virginia Talicuran, Jose S. Vallo and Teofila Villanueva
(petitioners') are public school teachers from various National Capital Region
Public respondents are likewise ordered to pay intervenors Rizalina P. schools.
Espiritu, Abdulia T. Landingin, Medardo Ilao, Rosita Somera,
Armando Cruz, Catalino Dabu, Francisco Villaraiz, Norma Jumilia,
In the latter part of September 1990, petitioners incurred unauthorized
Kennedy Basa, Rolando G. Cagasca and Alfonso Angeles their back
absences because of the teachers' strike. Their mass action called for the
salaries similarly under the above-quoted conditions.
payment of their 13th-month differentials and clothing allowances, as well as
the recall of DECS Order No. 39, series of 1990 and passage of the debt-cap
As regards petitioners Samuel Hipol, Jane Corros and Efren bill, among others.
Fontanilla, their petition is DISMISSED, as well as the petition in
intervention of Concepcion Timario.
Subsequently, then Department of Education, Culture and Sports (DECS')
Secretary Isidro Cario (Secretary Cario') issued a memorandum to all striking
SO ORDERED. teachers, as follows:
Right to Reinstatement and Back Salary TO : ALL PUBLIC SCHOOL
TEACHERS AND OTHER
[G.R. NOS. 142332-43. January 31, 2005] DECS PERSONNEL

YOLANDA BRUGADA, ANGELINA CORPUZ, EVELYN ESCANO, SUBJECT : RETURN TO WORK ORDER
SHIRLEY GARMA, DEDAICA JUSAY, PARSIMA LERIA, SONIA C.
MAHINAY, ADELA SOLO, ELSIE SOMERA, VIRGINIA Under civil service law and rules, strikes, unauthorized mass leaves and other
TALICURAN, JOSE S. VALLO, and TEOFILA forms of mass actions by civil servants which disrupt public services are
VILLANUEVA, Petitioners, v. THE SECRETARY OF EDUCATION, strictly prohibited.
CULTURE AND SPORTS, Respondent.
Those of you who are engaged in the above-mentioned prohibited acts are Secretary Cario rendered decisions finding petitioners guilty as charged and
therefore ordered, in the interest of public service, to return to work within 24 dismissed them from the service 'effective immediately. Petitioners appealed
hours from your walkout otherwise dismissal proceedings shall be instituted to the Merit Systems Protection Board, which dismissed the appeals.
against you.3 ςrνll
Petitioners appealed the decisions of the Merit Systems Protection Board to
Secretary Cario likewise issued a memorandum to the DECS officials, as the Civil Service Commission (CSC'). The CSC issued Resolutions reducing
follows: the penalty to six months suspension without pay and ordering the
petitioners' reinstatement without back wages. The CSC denied petitioners'
TO : REGIONAL DIRECTORS motion for reconsideration.

DIVISION SCHOOL SUPERINTENDENT Petitioners filed a Petition for Certiorari with this Court on 9 February 1995.
AND OTHER DECS OFFICIALS The Court referred the petition to the Court of Appeals pursuant to Revised
CONCERNED Administrative Circular No. 1-95.

SUBJECT : TEACHERS AND EMPLOYEES MASS The Court of Appeals rendered a Decision, the dispositive portion of which
reads:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
ACTION
WHEREFORE, the instant petition for certiorari cannot be given due
Please inform immediately all DECS teachers and employees who have course as it is hereby DISMISSED for lack of merit.
started a mass protest action to the prejudice of the public service that they
will be dismissed if they do not return to their jobs within twenty-four (24) SO ORDERED.5 ςrνll
hours from their walkout.
Petitioners filed a motion for reconsideration which the Court of Appeals
Regional Directors and division superintendent are hereby directed to denied in its 29 February 2000 Resolution.
accordingly initiate, in the interest of public service, dismissal proceedings
against those who continue with their action and hire their Hence, this petition.
replacements.4 ςrνll
The Ruling of the Court of Appeals
Petitioners disregarded the directives of Secretary Cario. Consequently,
Secretary Cario filed administrative charges against petitioners for grave The Court of Appeals ruled that the CSC did not gravely abuse its discretion
misconduct, gross neglect of duty, and gross violation of Civil Service laws in finding petitioners guilty of the administrative charges and suspending
and rules. Secretary Cario also charged petitioners with refusal to perform them for six months without pay.
official duty, gross insubordination, conduct prejudicial to the best interest of
the service and absence without leave. Secretary Cario gave petitioners five The Court of Appeals cited the following grounds for its
days to answer the charges, to secure the assistance of counsel, and to elect a decision:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
formal investigation. However, petitioners failed to answer despite notice.
FIRSTLY, although the constitutional right of the people to form
Thereafter, Secretary Cario created committees to investigate and hear the association[s] embraces both public and private sectors, pursuant to Article
cases. The investigating committees summoned the school principals XIII, Section 3, 1987 Constitution, the right to strike is not extended to
concerned to confirm reports on petitioners' absences. After the investigation, government employees under the Civil Service Law (P.D. No. 807).
the committees submitted their reports to Secretary Cario. Under Republic Act 875, workers, including those from the government-
owned and controlled-corporations, are allowed to organize but they Petitioners seek the reversal of the assailed decision on the ground that:
are prohibited from striking. xxx
THE COURT OF APPEALS COMMITTED A MOST GRIEVOUS
SECONDLY, during the deliberation of the 1987 Constitutional ERROR WHEN IT DID NOT EXPRESSLY RULE ON THE ISSUE
Commission, specifically on the Committee on Labor (Alliance of OF THE RIGHT OF PETITIONERS TO BACKWAGES AND IN
Government Workers, et al. v. Hon. Minister of Labor etc., 124 SCRA 1), EFFECT AFFIRMED THE TERRIBLY WRONG RULING OF
acting Commissioner of Civil Service Eli Rey Pangramuyen THE CIVIL SERVICE COMMISSION THAT PETITIONERS
stated:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ HAVE NO RIGHT TO BACKWAGES.7

It is the stand, therefore, of this Commission that by reason of the nature of The Court's Ruling
the public employer and the peculiar character of the public service, it must
necessarily regard the right to strike given to unions in private industry as The petition lacks merit.
not applying to public employees and civil service employees. xxx
Petitioners are no longer pleading for exoneration from the administrative
xxx charges filed against them. Instead, petitioners are merely asking for the
payment of back wages computed from the time they could not teach
THIRDLY, petitioners' contention that respondent Commission on Civil pursuant to Secretary Cario's dismissal orders minus the six months
Service gravely erred when it affirmed the decision of the then DECS suspension until their actual reinstatement.8 ςrνll
Secretary, invoking violations of constitutional due process, is without merit.
Petitioners have no right to back wages because they were neither
xxx In the case at bench, it has been shown that petitioners admitted joining exonerated nor unjustifiably suspended. Petitioners admitted participating in
the mass action and despite threats of dismissal, they disobeyed the return to the teachers' strike which disrupted the education of public school students.
work order within 24 hours from their walk-out. Petitioners were given an For this offense, the CSC reduced Secretary Cario's dismissal orders to six
opportunity to present their side. They did not only refuse to answer the months suspension without pay. The Court has already put to rest the issue
charges filed against them. They also opted to shy away from the of the award of back wages to public school teachers whom the CSC
investigation conducted. xxx reinstated in the service after commuting Secretary Cario's dismissal orders
to six months suspension without pay.9 In Alipat v. Court of Appeals ,10 the
xxx Court denied the teachers' claim for back wages stating
thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
FINALLY, the facts of the case clearly demonstrate strong basis for the
administrative charge[s] and justifies the subsequent penalty imposed upon This Court has also resolved the issue of whether back wages may be
herein petitioners. Indeed, petitioners' contention that they did not strike but awarded to the teachers who were ordered reinstated to the service after the
merely joined the mass action exercising their constitutional right dismissal orders of Secretary Cario were commuted by the Civil Service
to assemble, is a question of semantics. In the case of MPSTA v. Hon. Commission to six (6) months' suspension. The issue was resolved in the
Perfecto Laguio, (G.R. No. 95445) , and also in ACT v. Hon. Cari[]o, et al., negative in Bangalisan v. Court of Appeals on the ground that the teachers
G.R. No. 95590, the Supreme Court held that 'mass actions and peaceful were neither exonerated nor unjustifiably suspended. The Bangalisan case
assemblies amounted to a strike in every sense of the term, constituting as also ruled that the immediate implementation of the dismissal orders, being
they did, concerted and unauthorized stoppage of, or absence from work clearly sanctioned by law, was not unjustified. The Court held that as
which it was said teacher's sworn duty to perform. xxx6 regards the payment of back salaries during the period of suspension of a
member of the civil service who is subsequently ordered reinstated, the
The Issue payment of back wages may be decreed if 'he is found innocent of the
charges which caused the suspension and when the suspension is unjustified.
Citing the Bangalisan ruling, this Court in Jacinto v. Court of Appeals held motion for partial reconsideration of its decision dated
that when the teachers have given cause for their suspension ' i.e., the November 9, 1998 which ordered petitioner’s reinstatement,
unjustified abandonment of classes to the prejudice of their students - they without backwages.chanrob1es virtua1 1aw 1ibrary
were not fully innocent of the charges against them although they were
eventually found guilty only of conduct prejudicial to the best interest of the Petitioner was among the public school teachers who were
service and not grave misconduct or other offense warranting their dismissal dismissed by then DECS Secretary Isidro Cariño for ignoring
from the service; 'being found liable for a lesser offense is not equivalent to the return to work order while participating in the teacher’s
exoneration.11 ςrνll
mass strike at Liwasang Bonifacio from September to
October, 1990.
The facts in this case are substantially the same as those in Bangalisan v.
Court of Appeals,  12 De la Cruz v. Court of Appeals,  13 Alipat v. Court of
Records reveal that an administrative complaint was filed
Appeals  14 and Secretary of Education, Culture and Sports v. Court of
against petitioner, together with a certain Dalangin
Appeals.15 In these cases, the Court categorically declared that the payment
of back wages during the period of suspension of a civil servant who is Sarmiento and Filomeno Rafer, charging them with grave
subsequently reinstated is proper if he is found innocent of the charges and misconduct, gross neglect of duty, gross violation of the Civil
the suspension is unjustified. These two circumstances are absent in the Service Law and Rules of Reasonable Office Regulations,
present case. When a court has laid down a principle of law as applicable to refusal to perform official duty, gross insubordination,
a certain state of facts, it will adhere to that principle and apply it to all conduct prejudicial to the best interests of the service and
future cases where the facts are substantially the same.16 ςrνll absence without leave.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 31 Petitioner failed to give his explanation on the charges
July 1996 and Resolution dated 29 February 2000 of the Court of Appeals in against him despite due notice. Thus, he was meted
CA-G.R. SP Nos. 37794-99 and SP Nos. 37800-05. Costs against petitioners. preventive suspension for 90 days and consequently
dismissed from the service in a DECS decision dated
SO ORDERED. November 29, 1990.

Right to Reinstatement and Back Salary Petitioner appealed said decision to the Merit System
Protection Board but his appeal was dismissed for being filed
G.R. No. 138238. September 2, 2003.] out of time.

EDUARDO BALITAOSAN, Petitioner, v. THE SECRETARY Aggrieved, petitioner appealed to the Civil Service
OF EDUCATION, CULTURE AND SPORTS, Respondent. Commission but the appeal and the subsequent motion for
reconsideration were both denied in the resolutions dated
DECISION September 8, 1994 and April 14, 1998, respectively.

Petitioner then sought recourse from the Court of Appeals via

CORONA, J.: a petition for certiorari which yielded positive results,
obtaining for petitioner an order of reinstatement without,
however, any award of backwages in his favor.
Before us is a petition for review of the April 15, 1999 Thus:chanrob1es virtual 1aw library
resolution 1 of the Court of Appeals denying petitioner’s
WHEREFORE, the petition is hereby given DUE COURSE.
Resolution Nos. 94-4979 and 980819 of the Civil Service Petitioner’s reliance on Fabella is totally misplaced.
Commission are SET ASIDE. Accordingly, the Department of
Education, Culture and Sports’ Decision in Case No. DECS As aptly observed by the Court of Appeals, in Fabella, the
90-118 is MODIFIED — instead the petitioner is only guilty of jurisdiction and composition of the investigation committee
Conduct Prejudicial to the Best Interest of the Service for was put in issue from the very start. When the Court found
which he is meted out the penalty of suspension from the the investigation committee to be without competent
service for a period of six (6) months without pay jurisdiction, it declared all the proceedings undertaken by
considering that the petitioner has been out of the service for said committee void; therefore, it could not have provided
more than seven (7) years now as a result of his dismissal the legal basis for the suspension and dismissal of private
from the service, the Department of Education, Culture and respondents therein.
Sports is hereby ORDERED to immediately reinstate
petitioner Eduardo Balitaosan. In the case at bar, however, aside from the catch-all and
sweeping allegation of "denial of due process," petitioner
SO ORDERED. 2 never questioned the competence and composition of the
investigating committee. He belatedly raised this issue for
Not wholly satisfied with said decision, petitioner moved for the first time in the petition for review before the Court of
its partial reconsideration, praying for an award of Appeals. Thus, the appellate court acted correctly in rejecting
backwages, but the same was denied in the above assailed petitioner’s argument.
resolution dated April 15, 1999.
Issues raised for the first time on appeal cannot be
Thus, the instant petition. considered because a party is not permitted to change his
theory on appeal. To allow him to do so is unfair to the other
Petitioner alleges that the Court of Appeals committed party and offensive to the rules of fair play, justice and due
reversible error when it refused to apply the ruling in the process. 4
case of Fabella, Et. Al. v. Court of Appeals, Et. Al. 3 In the
said case, the Court, finding the investigation committee to In its Decision, the Court of Appeals justified petitioner’s
be without competent jurisdiction, declared that all reinstatement:chanrob1es virtual 1aw library
proceedings undertaken were necessarily void and thus could
not provide the legal basis for the suspension or dismissal of While We view with approbation the authority of the
the petitioners. The Court declared a denial of due process Department of Education, Culture and Sports to punish the
because the inclusion of a representative of a teacher’s public school teachers for engaging in the prohibited action,
organization in the investigating committee, which was that is, staging and joining the strike, We, particularly, take
indispensable to ensure an impartial tribunal, was not note here the seemingly compartmentalized treatment the
complied with. Consequently, it ordered the payment of back petitioner suffered from the respondent Civil Service
salaries, allowances, bonuses and other benefits and Commission. As petitioner’s appeal to the Merit Systems
emoluments which had accrued to the teachers involved Protection Board of the Civil Service Commission was
during the entire period of their preventive suspension rebuffed for having been filed out of time and eventually
and/or dismissal from the service.chanrob1es virtua1 1aw dismissed petitioner, that of Filomeno Rafer’s, after filing a
1ibrary third motion for reconsideration from the resolution of the
respondent commission dismissing him from the service, CIVIL SERVICE COMMISSION, Petitioner,
decided Rafer’s case on the merits and reduced his penalty vs.
from dismissal from the service to suspension for six (6) ARNULFO A. SEBASTIAN, Respondent.
months (Rollo, p. 29). We are bewildered actually, as Our
assessment is that the petitioner and Rafer are similarly -----------------------------------------
situated, why the respondent Commission failed to give the
same cordiality given to Rafer. Not only that, in several cases G. R. No. 162463
involving public school teachers, the respondent Commission
modified the penalty of dismissal from the service to a mere MUNICIPALITY OF KABASALAN, ZAMBOANGA SIBUGAY and
reprimand (Alipat v. Civil Service Commission, CA-G.R. SP Mayor FREDDIE I. CHU, Petitioners,
No. 38312). 5 vs.
COURT OF APPEALS and ARNULFO A.
The fact is that petitioner participated in the mass action SEBASTIAN, Respondents.
which in turn resulted in the filing of charges against him and
his subsequent dismissal later on. His reinstatement was not DECISION
the result of exoneration but an act of liberality by the Court
of Appeals. Accordingly, petitioner’s claim for backwages for CALLEJO, SR., J.:
the period during which he was not allowed to work must be
denied. Before us are two (2) consolidated petitions filed under Rule 45 and
Rule 65 of the Revised Rules of Civil Procedure for the reversal of the
No. 61776. Decision1 of the Court of Appeals (CA) and its Resolution
The general rule is that a public official is not entitled to any
in CA-G.R. SP No. 61776.
compensation if he has not rendered any service. No work,
no pay. Since petitioner did not render any service during the
The Antecedents
period for which he is now claiming his salaries, there is no
legal or equitable basis to order the payment thereof. 6
On August 1, 1988, Arnulfo A. Sebastian was given a permanent
appointment as Municipal Secretary of Kabasalan, Zamboanga del
WHEREFORE, the petition is hereby DENIED. The Resolution Sur (Sibugay), effective August 1, 1988.2
of the Court of Appeals dated April 15, 1999 denying
petitioner’s claim for backwages is AFFIRMED.chanrob1es Sometime in April 1992, Sebastian complained of acute gastric ulcer.
virtua1 1aw 1ibrary His doctor, Dr. Corregidor Catane, advised him to take several
months’ rest from work. Dr. Catane wrote the Vice-Mayor advising the
SO ORDERED. latter about Sebastian’s condition.3 On May 4, 1992, Sebastian filed
his application for vacation leave for 44 working days covering the
Right to Reinstatement and Back Salary period of July 1, 1992 to August 31, 1992. 4 He also filed his sick leave
application for 88 working days, from September 1, 1992 to December
31, 1992.5 Both applications for leave were approved by then Acting
G.R. No. 161733 October 11, 2005 Vice-Mayor Jose Cayon, with the condition that his sick leave was
without pay. The applications were not submitted to the Mayor for
approval; neither did Sebastian receive any clearance from the Mayor.
After the elections in May 1992, Freddie Chu and Catalino Genito, Jr. some Sangguniang Bayan members, the Vice-Mayor refused to
were the elected Mayor and Vice-Mayor, respectively, of Kabasalan, reinstate him. The complaint contained the following prayer:
Zamboanga del Sur, and assumed office.
WHEREFORE, it is respectfully prayed of this Honorable Commission
In a Letter dated August 25, 1992, Mayor Chu directed Sebastian to that, judgment be rendered:
report for duty not later than five days from receipt thereof. 6 Sebastian
did not comply with the said directive. On October 13, 1992, Mayor 1.) Declaring the dismissal of the complainant to be illegal and
Chu issued a final notice to Sebastian, directing him to report for duty contrary to law;
with a warning that should he fail to do so, he would be dropped from
the rolls.7 Sebastian failed to comply anew. 2.) Ordering the respondents the reinstatement of the complainant to
his position as Secretary to the Sangguniang Bayan;
Sebastian received a Memorandum8 dated November 3, 1992 from
Mayor Chu informing him that he was dropped from the municipal 3.) Ordering the respondents to pay the complainant of his backwages
government’s plantilla of personnel effective October 30, 1992, as he and other benefits he is entitled to.15
had been absent without leave since September 1, 1992 upon the
expiration of his vacation leave, and that he failed to report for duty Vice-Mayor Genito alleged in his answer16 that Sebastian was
within 30 days from approval of his leave of absence.9 appointed as Municipal Secretary and not as Sangguniang
Bayan Secretary; hence, it was the Mayor who had the authority to
Concerned with the plight of Sebastian, six members of dismiss or reinstate him to
the Sangguniang Bayan wrote Vice-Mayor Genito and requested that
he (Sebastian) be retained as Secretary of the Sangguniang Bayan. the said position. He averred that he did not concur with the Mayor’s
The matter was elevated to the Civil Service Commission (CSC) overt act of terminating Sebastian’s services.17
Regional Office.10
In his comment,18 Mayor Chu, maintained that Sebastian was never
On March 9, 1994, the CSC Regional Director, 11 transmitted his 2nd formally appointed as Sangguniang Bayan Secretary. He averred that
Indorsement12 to Vice-Mayor Genito declaring that since he had the the complainant abandoned his office; hence, he acted in accord with
authority to appoint all officials and employees of the Sangguniang law in terminating Sebastian’s employment as municipal secretary.19
Bayan under Section 445 of the Local Government Code, it was within
his power to reinstate Sebastian as Sangguniang Bayan Secretary. On July 23, 1998, the CSC issued Resolution No. 98198920 dismissing
Hence, should the Vice-Mayor decide to do so, the CSC Regional Sebastian’s complaint. It ruled that the complainant failed to submit a
Office would not interpose any objection thereto. However, Vice- medical certificate to justify his claim that he was, indeed, sick during
Mayor Genito ignored the indorsement of the CSC Regional the period of his absence; the medical report of Dr. Corregidor Catane
Director.13 was not enough. The CSC also declared that the complainant failed to
report for duty for 43 days despite the Mayor’s directive, and even
Almost four years or so after he was dropped from the municipal failed to inform the Mayor of his whereabouts. The CSC further stated
government’s plantilla, or on August 2, 1996, Sebastian filed a that Sebastian’s claim for reinstatement was already barred by laches,
Complaint14 for illegal dismissal before the CSC against Mayor Chu considering that he filed his complaint with the CSC only on August 2,
and Vice-Mayor Genito as respondents. Sebastian alleged that he 1996, three years from October 30, 1992, the date of his separation
was the Sangguniang Bayan and Municipal Secretary, and after the from the service. The fallo of the CSC Resolution reads:
end of his leave, Mayor Chu barred him from reporting to work and
from gaining entry into his office at the Sangguniang Bayan.
Sebastian contended that, despite the proddings of
WHEREFORE, the complaint of Arnulfo A. Sebastian is hereby In its comment24 to the petition, the CSC, through the Office of the
dismissed. Accordingly, his request for reinstatement to his former Solicitor General (OSG), averred that the petition was fatally defective
position as SB Secretary is hereby denied.21 because the petitioner impleaded it as respondent instead of Mayor
Chu and Vice-Mayor Genito. It posited that Sebastian was lawfully
Sebastian’s motion for reconsideration was denied by the CSC separated from the service since he failed to report back for work for a
through Resolution No. 002012 dated September 4, 2000.22 considerable length of time25 despite due notice. More than three
years had elapsed from his dismissal from the government service
Sebastian filed his petition with the Court of Appeals (CA) under Rule before he filed his complaint with the CSC; hence, the complainant
43 of the Rules of Court, naming the CSC as was barred by laches from questioning his separation from the
the sole respondent and ascribing the following errors: service.26

I. The CA rendered judgment granting the petition. It found that the

petitioner was deprived of his right to due process when he was
THAT THE RESPONDENT CIVIL SERVICE COMMISSION dismissed without previous notice and hearing and without any valid
GRAVELY ERRED IN NOT FINDING THAT THE PETITIONER WAS cause. Sebastian was justified in not reporting back for work because
DENIED DUE PROCESS; he was on sick leave duly approved by the Vice-Mayor; thus, he
should be reinstated as Municipal Secretary. However, the CA ruled
II. that the petitioner could not be reinstated as Sangguniang
Bayan Secretary since there was no showing that he had been duly
appointed to such position in the first place. The CA declared that
THAT THE RESPONDENT CIVIL SERVICE COMMISSION
Sebastian was not barred by laches from seeking his reinstatement
GRAVELY ERRED IN NOT FINDING THAT THE TERMINATION OF
because he waited for the outcome of the well-meaning
THE PETITIONER FROM SERVICE WAS ILLEGAL AND
representations of some members of the Sangguniang Bayan who
POLITICALLY MOTIVATED;
took up the cudgels for him when they referred the matter to the CSC
Regional Office. The fallo of the CA decision reads:
III.
WHEREFORE, finding merit in the petition, We GRANT the same.
THAT THE RESPONDENT CIVIL SERVICE COMMISSION The appealed CSC Resolution No. 98-1989 is REVERSED and SET
GRAVELY ERRED IN FINDING THAT THE MUNICIPAL VICE- ASIDE. Petitioner is reinstated to his office as Municipal Secretary of
MAYOR HAD IMPLIEDLY CONCURRED IN THE ORDER OF THE Kabasalan, Zamboanga del Sur, with full back salaries and other
MUNICIPAL MAYOR DROPPING THE PETITIONER FROM benefits accorded by law.27
SERVICE DESPITE ITS EARLIER CONCLUSION THAT THE VICE-
MAYOR AND NOT THE MAYOR WHO IS VESTED WITH
However, the CA failed to resolve the issue of whether or not the
AUTHORITY TO TERMINATE A MUNICIPAL SECRETARY;
petition should be dismissed for the petitioner’s failure to implead the
Mayor and the Vice-Mayor as parties-respondents.
IV.
The OSG filed a motion for the reconsideration of the said decision of
THAT THE RESPONDENT CIVIL SERVICE COMMISSION the court on the ground that:
GRAVELY ERRED IN FINDING THAT PETITIONER IS ALREADY
BARRED BY LACHES.23
With due respect, the August 26, 2002 Decision of this Honorable
Court is contrary to our procedural law, resulting in a denial of due
process on the part of the real parties-in-interest.28
The Municipality of Kabasalan sought to intervene and filed a Motion Petitioners Municipality of Kabasalan and Mayor Chu, for their part,
to Admit a Motion for the Reconsideration of the CA decision. posit that the CA gravely abused its discretion when it failed to
Appended thereto was a Motion verified by Mayor Chu, also for the dismiss the petition for respondent Sebastian’s failure to implead them
reconsideration of the decision. The Municipality averred that it was a as parties-respondents, and merely noted their motion to intervene in
real party-in-interest as respondent because the petition was for the CA-G.R. SP No. 61776. They aver that they were indispensable
alleged payment of backwages. The CA denied the motion of the parties as respondents in the CA, and should have been allowed to
OSG and merely noted the motion of the Municipality. 29 The CA ruled intervene and be heard on the issues. Unless impleaded, they would
that the intervention of the Municipality was inappropriate because not be bound by the CA decision.
judgment had already been rendered. Citing its ruling in Morales v.
Civil Service Commission,30 it held that the respondent CSC was the The Court is posed to resolve the following issues: (1) whether
proper party-in-interest because there was no private respondent. The petitioner Mayor is the real party-in-interest as respondent in the CA;
appellate court, likewise, declared that the CSC was estopped from and (2) whether or not respondent Sebastian had been illegally
claiming that the petition was defective for Sebastian’s failure to dismissed by petitioner Mayor Freddie Chu as Municipal Secretary.
implead the Mayor and the Vice-Mayor as parties-respondents. The
CA held that the CSC should have raised the issue in its comment on Section 6, Rule 43, of the Rules of Civil Procedure provides that a
the petition. petition for review shall state in full the names of the parties to the
case. The court or agency which rendered the decision or resolution is
Forthwith, the CSC, as the petitioner, filed its petition for review not to be impleaded either as petitioner or respondent, viz.:
on certiorari under Rule 45 of the Rules of Court, docketed as G.R.
No. 161733. The Municipality of Kabasalan, Zamboanga Sibugay and SEC. 6. Contents of the petition.— The petition for review shall (a)
Mayor Freddie Chu filed a separate petition for certiorari under Rule state the full names of the parties to the case, without impleading the
65 with a prayer for the issuance of a restraining order and/or court or agencies either as petitioners or respondents; (b) contain a
preliminary injunction, alleging that the CA committed grave abuse of concise statement of the facts and issues involved and the grounds
discretion amounting to excess or lack of jurisdiction in reversing the relied upon for the review; (c) be accompanied by a clearly legible
assailed Resolution of the CSC. The petition was docketed as G.R. duplicate original or a certified true copy of the award, judgment, final
No. 162463.31 On April 13, 2004, the Court resolved to consolidate order or resolution appealed from, together with certified true copies
G.R. No. 162463 with G.R. No. 161733.32 of such material portions of the record referred to therein and other
supporting papers; and (d) contain a sworn certification against forum
Petitioner CSC asserts that it is not the real party-in-interest in the shopping as provided in the last paragraph of Section 2, Rule 42. The
present case. It posits that the Mayor and the Vice-Mayor of petition shall state the specific material dates showing that it was filed
Kabasalan, Zamboanga del Sur (Sibugay), who stood to be benefited within the period fixed herein.
or injured by the judgment, are the real parties-in-interest. Petitioner
CSC contends that failure to implead the real parties-in-interest The parties in the proceedings before an agency or in the lower court
constitutes a denial of due process, as they were not afforded the are the parties in a petition for review in the CA. We agree with the
opportunity to air their side on the matter when the case was brought contention of the petitioners that the real party-in-interest as party-
before the CA. Petitioner CSC relies on Section 6, Rule 43 of the respondent in the CA was Municipal Mayor Freddie Chu who was the
Revised Rules of Court, which provides, among others, that the respondent in the CSC. Respondent Sebastian, who was the
petition filed under it shall be made without impleading the court or complainant in the CSC, sought to nullify the November 3, 1992
agencies which rendered the assailed decision or resolution, either as Memorandum of the Mayor terminating his services effective October
petitioners or respondents; and that under Section 7 of the same 30, 1992. Moreover, the respondent, as complainant in the CSC,
Rule, failure to comply with the requirements shall be sufficient ground prayed that he be granted backwages from September 1, 1992 until
for the dismissal of the petition. his reinstatement.
The CA ruled that when there is no private individual as respondent in support his claim that he was indeed sick during the period of his
a petition for review, the public agency a quo is impleaded as a absences, or to prove the seriousness of his illness, requiring a long
respondent. This is erroneous. While it is true that petitioner Mayor period of treatment and recovery. The CSC held
acted in his official capacity when he dismissed the respondent from
the service, nevertheless, he was entitled to be heard on the petition. that the letter of Dr. Catane was not enough. Moreover, the
He is entitled to due process. respondent failed to inform petitioner Mayor of his physical condition
and whereabouts. According to the CSC, the respondent used the
The CA relied in its own decision entitled Edmundo Morales v. Civil medical advice given by Dr. Catane merely as an afterthought,
Service Commission, docketed as CA-G.R. SP No. 54706 where, designed to cover up for his unauthorized absences.
citing Section 633 of Rule 135, it opined that without a public
respondent, the OSG cannot be directed to comment. 34 Such ruling, On the other hand, the CA declared that the petitioner Mayor
however, is not applicable in this case. There is a specific provision dismissed the respondent without any valid cause. The appellate
suitable to resolve the issue in the case at bar, that is, Section 6 of court ruled that the respondent had filed an application for sick leave
Rule 43, which clearly provides, inter alia, that petitioner "should state and that such application was approved by the duly-constituted
the full names of the parties to the case, without impleading the court authority at the time, the then Acting Vice-Mayor. The CA, likewise,
or agencies either as petitioners or respondents." declared that the respondent could not be faulted for not reporting
back to work as he relied on his approved application for sick leave.

The petitions are meritorious.

If petitioner Mayor is not impleaded as a party-respondent in the CA,
he cannot be compelled to abide by and comply with its decision, as The ruling of the CA is erroneous. Under Section 444(b)(1)(xiv) of the
the same would not be binding on him. No man shall be affected by 1991 Local Government Code,38 applications for leave of municipal
any proceeding to which he is a stranger, and strangers to a case are officials and employees appointed by the Mayor shall be acted upon
not bound by any judgment rendered by the court. 35 Ergo, res inter by him. In this case, the respondent’s applications for leave were
alios judicatae nullum aliis praejudicrium facint. 36 A person who was passed upon and approved by the Acting Vice-Mayor and not by the
not impleaded in the complaint cannot be bound by the decision then Municipal Mayor.
rendered therein, for no man shall be affected by any proceeding in
which he is a stranger.37 Section 16, Rule XVI39 of the Omnibus Rules, Implementing Book V of
the 1987 Administrative Code, then required applications for sick
Ordinarily, the Court will order the respondent to amend his petition to leave in excess of five days to be accompanied by a proper medical
implead petitioner Mayor as party-respondent and remand the petition certificate. However, the respondent failed to submit any medical
to the CA for further proceedings. However, in view of the peculiar certificate in support of his application for sick leave from September
factual backdrop in the instant case, and considering that petitioner 1, 1992 to December 31, 1992 or for a period of four months. The
Mayor assailed in his petition the decision of the CA on its merits and letter of Dr. Catane was not sufficient.
articulated his arguments in support thereof, the Court shall resolve
the petitions on their merits to avert needless delay. Section 32 of the same Omnibus Rules 40 required leaves without pay
in excess of one month to be cleared by the proper head of the
The CSC affirmed the dismissal of the respondent on its finding that department, in this case, the Municipal Mayor. In this case, the
the respondent failed to report back to work despite due notice. The respondent failed to secure clearance from the Municipal Mayor, and
CSC declared that the respondent had been continuously absent was granted four months’ sick leave without pay by the Acting Vice-
without approved leave for more than 30 days. Other than the letter of Mayor without the appropriate clearance from the Mayor.
Dr. Corregidor Catane, he failed to present any medical certificate to
The CA ruled that the respondent was not barred by laches from filing may be held to have abandoned title to the office and any right to
his complaint against the petitioner Mayor for reinstatement on recover its emoluments.42 There must be stability in the service so that
account of the representations made in his behalf by six members of public positions may not be unduly retarded; delays in the
the Sangguniang Bayan in the CSC, and that the respondent waited enforcement of a right to positions in the service must be discouraged.
for the outcome of such representations.
It behooved the respondent to take the appropriate remedy for the
The ruling of the appellate court is barren of factual basis. The nullification of the petitioner Mayor’s November 3, 1992 Memorandum
respondent was required by the petitioner Mayor to report back to without unreasonable delay. The respondent failed to do so for a
work not later than five days from notice, but he failed to comply. On period of almost four years, and in the meantime, public service has
October 12, 1992, petitioner Mayor again wrote the respondent been prejudiced by his absence. Case law has it that one is barred
directing him to report for duty, with a warning that should he fail to do from asserting a right if he fails to do so for an unreasonable and
so, he would be dropped from the rolls. Again, the respondent ignored unexplained length of time which by the exercise of diligence, he
the petitioner Mayor’s letter. Having been absent for more than 30 could have or should have done earlier. By sleeping on his right for
days without an approved leave, the respondent was considered almost four years, the respondent is now barred from claiming his
dropped from the service after one month.41 He, indeed, received right to be reinstated to his position as Municipal Secretary. Relief has
notice that he had been dropped from the service effective October been denied to those who, by sleeping on their rights for an
30, 1992. The respondent never moved for a reconsideration thereof. unreasonable length of time, either by negligence, sheer folly or
It was only on August 2, 1996, or after the lapse of almost four (4) inattention, have allowed their claims to slumber. The laws aid the
years, that he filed his complaint against the petitioner Mayor before vigilant and not those who slumber on their rights.43
the CSC.
IN LIGHT OF ALL THE FOREGOING, the Petitions are GRANTED.
It is undisputed that shortly after the petitioner Mayor dismissed the The assailed Decision and Resolution of the Court of Appeals in CA-
respondent from the service, six Sangguniang Bayan members G.R. SP No. 61776 are REVERSED and SET ASIDE. The
interceded for the respondent in the CSC. However, such Resolutions of the CSC are REINSTATED.
representation was related solely to the respondent’s reinstatement
as Sangguniang Bayan Secretary. The members of the Sangguniang SO ORDERED.
Bayan never sought the reinstatement of the respondent to the
position of Municipal Secretary. It was only on August 2, 1996, after Right to Reinstatement and Back Salary
the lapse of well-neigh four years from October 30, 1992, that the
respondent sought, for the first time, his reinstatement as Municipal G.R. NO. 167762 December 15, 2005]
Secretary by filing his complaint against the petitioner Mayor in the
CSC. In the interim, the respondent failed to take any action against
BATANGAS STATE UNIVERSITY, Petitioner, v. NESTOR
the petitioner Mayor on account of his dismissal from the government
service. BONIFACIO, Respondent.

If an employee was illegally dismissed, he may, by his inaction or by DECISION

sleeping on his right, in law, be considered as having abandoned the
office to which he was entitled to be reinstated. A person illegally YNARES-SANTIAGO, J.:
dismissed from the office is not thereby exonerated from the
obligation to take steps for his own protection and may not, for an This Petition for Review assails the April 11, 2005
unreasonable length of time, acquiesce to the order of removal and Decision1 of the Court of Appeals in CA-G.R. SP No. 49444
then seek for his reinstatement. In case of unreasonable delay, he which set aside CSC Resolution Nos. 9814432 and
9825403 affirming the dismissal from the government service Records (DTR) from October to December 1994, Logbook of
and denying the motion for reconsideration, of respondent attendance from November 2 to December 1994, and Letters
Nestor Bonifacio, respectively. dated October 27, 1994 and November 10, 1994 from Romy
A. Emplica, the school's Sports Coordinator. Further, he
Respondent was one of the faculty members of Batangas contends that his DTRs were not accepted by the personnel
State University4 who held protest rallies near the main office because his immediate supervisor in the office of the
campus of the university and at the provincial capitol of president unjustifiably refused to sign them.10
Batangas to air their grievances against its president, Dr.
Ernesto M. De Chavez. He was also among the faculty On the other hand, De Chavez denies the allegations of
members who filed a complaint against De Chavez and other harassment. He explains that respondent's transfer to his
school officials for alleged graft and corruption with the office was upon the request of Roberto Kalalo, his Chief of
Senate Blue Ribbon Committee, which referred the same to Staff, as he was the most qualified employee to perform the
the Presidential Commission Against Graft and Corruption task. However, despite receipt of the memorandum order,
(PCAGC).5 respondent did not report to his office, thus, he was dropped
from the rolls after incurring absences without official leave
On October 10, 1994, Dr. Rolando Lontok, Vice President for for more than 30 days.11
Academic Affairs, issued a memorandum reassigning
respondent to the office of the president. As the school The Civil Service Regional Office (CSRO) No. IV upheld the
semester would end on October 13, 1994, respondent termination of the respondent from the service.12
requested De Chavez if he could report to his office only after
the said date, to which the latter agreed.6 The Civil Service Commission, in CSC Resolution No. 981443
dated June 11, 1998, dismissed the appeal and affirmed the
Meanwhile, respondent continued to discharge his duties as a assailed order. Respondent's motion for reconsideration was
teacher as well as coach of the university's basketball team.7 also denied in CSC Resolution No. 982540 dated September
29, 1998.13
On January 10, 1995, De Chavez issued Office Order No. 1,
Series of 1995 dropping respondent from the rolls on the Aggrieved, respondent filed a Petition for Review under Rule
ground of absence without official leave (AWOL) for more 43 of the Rules of Court before the Court of Appeals which
than 30 days.8 reversed CSC Resolution Nos. 981443 and 982540. The
dispositive portion of the decision reads:
Respondent claims that his dismissal from the service for
being on AWOL has no basis because he was attending to his WHEREFORE, the PETITION FOR REVIEW is GIVEN DUE
job as a teacher and coach of the university's basketball COURSE.
team. His detail to the office of the president and the
subsequent dropping from the rolls was malicious and in CSC RESOLUTIONS NOS. 981443 AND 982540 are SET
retaliation to his filing of a complaint against De Chavez and ASIDE.
other school officials.9 In fact, the detail order did not specify
the functions he was to discharge and he was always warned Petitioner NESTOR BONIFACIO is REINSTATED as a drafting
that he would be dropped from the rolls soon. To show that instructor of respondent PABLO BORBON MEMORIAL
he was never absent, respondent presented his Daily Time INSTITUTE OF TECHNOLOGY, now BATANGAS STATE
UNIVERSITY, with full back salaries (i.e., the compensation alleged failure to report to his new assignment in the office of
fixed for his position and prevailing at the time of the president.
reinstatement, together with the allowances and benefits
appurtenant thereto, as well as the standard or automatic Undoubtedly, the above issue is one of fact as it assails the
general increases in salary decreed thereafter from time to factual finding of the Court of Appeals that respondent had
time, inclusive of benefits for sick leave and vacation leave not gone AWOL. Basic is the rule in this jurisdiction that only
counted from the date of illegal dismissal, and all benefits questions of law may be raised in a Petition for Review
arising from automatic promotions, if any, and increases in on Certiorari under Rule 45 of the Rules of Court. The
salary during the period of his illegal dismissal) limited to five jurisdiction of the Supreme Court in cases brought to it from
(5) years. the Court of Appeals is limited to reviewing and revising the
errors of law imputed to it, its findings of fact being
SO ORDERED.14 conclusive,16 save for the most cogent and compelling
reason, like when the factual findings of the Court of Appeals
Hence, this Petition for Review based on the following and the trial court are contradictory.17
ground:
Indeed, in the case at bar, the findings of the Civil Service
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN Commission and its conclusion based on the said findings
REINSTATING RESPONDENT BASED ON THE "EQUITIES OF contradict those of the appellate court. However, upon
THE SITUATION" AND IN REVERSING THE CIVIL SERVICE careful review of the records, we find no grounds to grant
COMMISSION RESOLUTIONS FINDING THAT HIS the petition. We, thus, affirm the decision of the Court of
CONTINUOUS ABSENCE AT HIS POST FOR MORE THAN Appeals.
THIRTY WORKING DAYS JUSTIFIED HIS DISMISSAL FROM
THE SERVICE.15 Section 2(3), Article IX-B of the Constitution provides that
"no officer or employee of the civil service shall be removed
Petitioner contends that the Court of Appeals erred in or suspended except for cause provided by law." The
disregarding the finding of fact of the Civil Service Administrative Code of 1987 and the Civil Service Law echo
Commission that respondent did not report to his new this constitutional edict of security of tenure of the
assignment, in violation of the rule on finality of factual employees in the civil service. The guarantee of security of
findings of administrative or quasi-judicial agencies. By tenure is an important cornerstone of the civil service system
relying solely on speculation, it further erred in ruling that De because it secures for a faithful employee permanence of
Chavez and other school officials dealt with the respondent in employment, at least for the period prescribed by law, and
bad faith. Petitioner also argues that the Court of Appeals frees the employee from the fear of political and personal
erred in applying "equity" despite the Omnibus Civil Service reprisals.18
Rules and Regulations which warranted the dropping from
the rolls of an employee who incurs absences without official With this mandate, we held in Government Service
leave for more than 30 days. Insurance System v. Court of Appeals 19 that said
constitutional prohibition is a guaranty of both procedural
In fine, the issue to be resolved is whether or not respondent and substantive due process and that the burden of proof is
can be considered AWOL for more than 30 days for his upon the employer to show the validity of the dismissal and
not upon the employee to prove otherwise.
We find that petitioner failed to discharge this burden. and several times thereafter; however, he was treated by De
Chavez with condescension and hostility and was not given
Petitioner dropped respondent from the rolls based on any specific task to perform. Respondent maintains that his
Section 63, Rule XVI of the Omnibus Civil Service Rules and DTRs were not accepted by the personnel department
Regulations which pertinently provides: because his immediate supervisor in the office of the
president unjustifiably refused to sign them.
Sec. 63. Effect of absences without approved leave. -  An
official or employee who is continuously absent without Believing the respondent, the Court of Appeals reversed the
approved leave for at least thirty (30) calendar days shall be assailed resolutions of the Civil Service Commission, to wit:
considered on absence without official leave (AWOL) and
shall be separated from the service or dropped from the rolls Our examination of the records tells us that the CSC did not
without prior notice. He shall, however, be informed, at his give due consideration to the petitioner's detailed and
address appearing on his 201 files of his separation from the credible explanations to the effect that he actually reported
service, not later than five (5) days from its effectivity. to Dr. De Chavez upon receiving the memorandum of
reassignment from Dr. Lontok but Dr. De Chavez allowed
If the number of unauthorized absences incurred is less than him to report after October 17, 1994 so that he could finish
thirty (30) calendar days, a written Return-to-Work Order his teaching duties for the term; that he later on reported to
shall be served to him at his last known address on record. Dr. De Chavez but the latter treated him with condescension
Failure on his part to report for work within the period stated and hostility, making sure that the petitioner was aware that
in the order shall be a valid ground to drop him from the he would soon be dismissed; and that the petitioner went
rolls. several more times to the Office of the President to inquire
about his DTRs but he was given the run-around. PBMIT did
Clearly then, an employee continuously absent without not refute the petitioner's explanations about reporting to Dr.
approved leave for at least 30 calendar days may be dropped De Chavez and about the latter's harsh and angry attitude
from the rolls without prior notice. towards him on several occasions.

In the instant case, respondent was terminated from the It is unfortunate that the CSC sided with PBMIT only because
service because petitioner's personnel department refused to the DTRs were not signed and approved by the petitioner's
accept respondent's DTRs as they were not countersigned by immediate superior, who was the chief of staff of the Office
his immediate supervisor. His termination from the service of the President. In doing so, the CSC put a higher value to
was upheld by the Civil Service Commission. form rather than to substance. That, to us, is unacceptable
for it goes against the clear equities of the situation. The CSC
However, respondent contests the finding that he was thereby committed serious reversible error, particularly since
absent. He claims that he reported for work and faithfully the records undeniably showed that the approval of the DTRs
discharged his functions as a teacher and coach of the was deliberately withheld due to the hostility of Dr. De
university basketball team. He regularly punched his DTRs in Chavez towards the petitioner. Without doubt, PBMIT and its
the bundy clock for the months of October, November and officials, starting with Dr. De Chavez, were guilty of evident
December, 1994, as well as entered his name in the logbook bad faith in dealing with the petitioner on the matter of his
when the bundy clock malfunctioned. He also claims that he DTRs.20
reported to the office of the president on October 17, 1994
We agree with the Court of Appeals. monetary benefits should not be limited to 5 years and must
therefore be modified in line with the recent case of Civil
Petitioner's bad faith becomes more apparent when De Service Commission v. Gentallan.24 We held in said case that
Chavez ignored respondent's presence in the school, allowed an illegally dismissed government employee who is later
30 calendar days to lapse and thereafter immediately caused ordered reinstated is entitled to backwages and other
the termination, instead of summoning him to explain his monetary benefits from the time of her illegal dismissal up to
alleged absences. Clearly, the detail of respondent in the her reinstatement. This is only fair and just because an
office of the president was meant to embarrass him and the employee who is reinstated after having been illegally
subsequent termination of employment was part of the dismissed is considered as not having left her office and
dubious scheme to rid of respondent's presence in the school should be given the corresponding compensation at the time
in direct violation of respondent's right to work and unduly of her reinstatement.
dilutes the constitutional guarantees of security of tenure
and due process. As held in Bentain v. Court of Appeals:21 WHEREFORE, the petition is DENIED. The April 11, 2005
Decision of the Court of Appeals in CA-G.R. SP No. 49444
While a temporary transfer or assignment of personnel is setting aside CSC Resolution Nos. 981443 and 982540 which
permissible even without the employee's prior consent, it upheld the dismissal of respondent from the service
cannot be done when the transfer is a preliminary step is AFFIRMED with the MODIFICATION that respondent is
toward his removal, or is a scheme to lure him away from his entitled to full backwages and other monetary benefits from
permanent position, or designed to indirectly terminate his the time of his illegal dismissal up to the time of his actual
service, or force his resignation. Such a transfer would in reinstatement.
effect circumvent the provision which safeguards the tenure
of office of those who are in the Civil Service.... SO ORDERED.

Neither are the circumstances obtaining in the case at bar Right to Reinstatement and Back Salary
constitute abandonment. It must be emphasized that the
detail order was issued on October 10, 1994 when the school [G.R. No. 175276, May 31 : 2011]
semester was not yet over. Upon his detail in the office of
the president, respondent did not lose his position22 as a ISABELO L. GALANG, PETITIONER, VS. LAND BANK OF
teacher. Contrary to petitioner's allegation, it was also for THE PHILIPPINES, RESPONDENT.
the school's interest that respondent continued to conduct
classes and coach the basketball team. Thus, it cannot be [G.R. NO. 175282]
said that respondent abandoned his position considering that
he continued to faithfully discharge his duties. Abandonment LAND BANK OF THE PHILIPPINES, PETITIONER, VS.
is a matter of intention and cannot lightly be presumed from ISABELO L. GALANG, RESPONDENT.
certain equivocal acts. To constitute abandonment, there
must be clear proof of deliberate and unjustified intent to DECISION
sever the employer-employee relationship.23
VILLARAMA, JR., J.:
The Court of Appeals correctly ordered respondent's
reinstatement. However, the award of backwages and other
These are two consolidated petitions for review on of Directors.
certiorari[1] filed by Isabelo L. Galang and Land Bank of the
Philippines (Land Bank) to assail the Decision[2] dated May On April 26, 1990, the Board of Directors issued Resolution
25, 2006 and Resolution[3] dated October 25, 2006 of the No. 90-043[8] which approved Del Rosario's recommendation
Court of Appeals (CA) in CA-G.R. SP No. 91910.  The CA had but modified the penalty to forced resignation with forfeiture
reversed and set aside Resolution Nos. 040894[4] and of all benefits. Aggrieved, Galang and Ocampo appealed to
051256[5] of the Civil Service Commission (CSC) denying the Merit Systems Protection Board (MSPB).
Galang's Motion for Issuance of Writ of Execution[6] and
motion for reconsideration. In a Decision[9] dated March 8, 1991, the MSPB sustained the
penalty imposed upon Galang and Ocampo but found them
The facts of the case are undisputed. liable only for Dishonesty, Grave Misconduct, Conduct
Prejudicial to the Best Interest of the Service, and Receiving
On June 20, 1988, Isabelo L. Galang, the Branch Manager of for Personal Use a Fee, Gift or Other Valuable Thing in the
Land Bank Baliuag, Bulacan was charged with Dishonesty, Course of Official Duties or in Connection Therewith when
Misconduct, Conduct Prejudicial to the Best Interest of the such Fee is Given by Any Person in the Hope of Receiving a
Service, Gross Neglect of Duty, Violation of Rules and Favor or Better Treatment than that Accorded Other
Regulations, and Receiving for Personal Use a Fee, Gift or Persons.  The MSPB, however, absolved Galang of the
Other Valuable Thing in the Course of Official Duties or in charges of Gross Neglect of Duty and Violation of Rules and
Connection Therewith when such Fee is Given by Any Person Regulations.  Galang and Ocampo filed a motion for
in the Hope or Expectation of Receiving a Favor or Better reconsideration, which was denied in a Decision[10] dated
Treatment than that Accorded Other Persons or Committing June 11, 1991.
Acts Punishable Under the Anti-Graft Laws.  The case was
docketed as Administrative Case No. 88-002.[7] Before the CSC, Galang and Ocampo's appeal was dismissed
for lack of merit through Resolution No. 93-1001[11] dated
Allegedly, Galang demanded money from four borrowers of March 12, 1993.  Their motion for reconsideration was
the bank, namely, Ceferino Manahan, Gregorio Modelo, likewise denied in Resolution No. 93-3812.[12]
Sotero Santos and Feliza de Vera, in return for a reduction of
interest rates and condonation of penalty charges on their Galang alone filed a petition for certiorari[13] with the
overdue loans. The complaint further accuses Galang of Supreme Court alleging grave abuse of discretion committed
making unauthorized disbursements for the repair of the by the CSC.  In a Resolution[14] dated June 20, 1995, the
company car.  Along with Galang, the borrowers also Court referred the matter to the CA pursuant to Revised
charged Conrado Ocampo, a Project Analyst in the same Administrative Circular No. 1-95.[15]
branch, for his alleged participation in soliciting money from
them. On November 21, 1996, the CA rendered a Decision[16] in CA-
G.R. SP No. 37791 nullifying Resolution Nos. 93-1001 and
On November 3, 1989, the Hearing Officer of Land Bank 93-3812.  The appellate court excluded the affidavits of the
issued a Joint Resolution dismissing both charges for complainants as inadmissible in evidence for lack of cross-
insufficiency of evidence.  This was later reversed by Land examination.  Without them, it found no substantial evidence
Bank's General Counsel, Corazon P. Del Rosario, who to hold Galang administratively liable.
recommended Galang and Ocampo's dismissal to the Board
Subsequently, Galang filed a Motion for Clarification and/or its willingness to pay Galang Meal Allowance and Rice
Reconsideration[17] with a prayer for the CA to order his Subsidy.  It, however, refused to include PERA and RATA as
reinstatement and the payment of his back wages, bonuses part of his back salaries for 1990 to 1995; the former,
and other fringe benefits reckoned from the date of his because it was authorized to be paid to LBP employees only
dismissal.  Land Bank, likewise, moved for reconsideration. in 1997 and the latter, because he was unable to discharge
the functions of his office.  Land Bank further explained that
In a Resolution[18] dated September 5, 1997, the CA granted Galang could not be reinstated, or his back wages paid from
Galang's motion and directed Land Bank to reinstate him and October 1, 1997 since there was yet no final and executory
to pay him back salaries not exceeding five years. Land Bank decision of the court then. The bank maintained that his
received notice of said resolution on September 15, 1997, salaries were computed correctly, based on the prevailing
but filed no appeal. rate for the period when he was unable to work in
accordance with the Court's ruling in Bangalisan v. Court of
Consequently, Galang filed a Motion to Effect Entry of Appeals.[25]
Judgment.[19]  On November 14, 1997, Land Bank filed before
this Court a Petition for Certiorari[20] which was docketed as On June 7, 2002, Galang filed a Motion for
G.R. No. 131186. Clarification[26] with this Court to settle the following issues:

In a Resolution[21] dated January 17, 2001, this Court 9.1 Whether Respondent is entitled to Meal and Rice
dismissed the petition.  This Court concluded that Land Allowances, Representation and Travel Allowance and
Bank's petition for certiorari under Rule 65 of the 1997 Rules Housing Allowance, and the basis thereof;
of Civil Procedure, as amended, was merely an afterthought
considering that it failed to file a petition for review on 9.2 Whether the payment of Provident Fund is limited to five
certiorari under Rule 45 of said Rule.  The bank moved for (5) years only;
reconsideration but was denied.  Thus, on August 7, 2001,
this Court issued an Entry of Judgment.[22] 9.3 The basis for computing the 5-year backwages;

In the meantime, Galang was reinstated in the payroll on 9.4 Whether Respondent should have been reinstated since
August 16, 2001.  However, on December 14, 2001, Galang October 1, 1997.[27]
wrote Land Bank's President, Margarito Teves, complaining
that he has yet to receive Personnel Economic Relief On July 24, 2002, this Court issued a Resolution[28] which
Allowance (PERA), Representation and Travel Allowance noted without action Galang's motion for clarification in view
(RATA), Meal Allowance and Rice Subsidy.  He claimed that of the Entry of Judgment[29] on August 7, 2001.
since this Court found Land Bank's petition for certiorari to
be a mere afterthought, he should have been reinstated on On May 15, 2003, Galang filed a Motion for Issuance of Writ
October 1, 1997 - after the fifteen (15)-day period to appeal of Execution[30] with the CSC to enforce the November 21,
the Resolution dated September 5, 1997 had lapsed. Galang 1996 Decision of the CA in CA-G.R. SP No. 37791, which
also insisted that his back salaries be computed based on the ordered his reinstatement and the payment of his backwages
current salary rate prescribed for his previous position.[23] for five years.

In a letter[24] dated February 8, 2002, Land Bank expressed The Commission denied said motion in Resolution No.
040894 dated August 9, 2004.  Galang moved for
reconsideration, but his motion was denied in Resolution No. WHETHER OR NOT THE HONORABLE COURT OF APPEALS
05-1256 dated September 13, 2005.  The CSC held that HAS COMMITTED A GRAVE AND REVERSIBLE ERROR WHEN
execution will not lie because Land Bank had complied with IT RULED THAT [PERSONNEL] ECONOMIC RELIEF
the appellate court's decision. ALLOWANCE (PERA) AND REPRESENTATION AND
[TRANSPORTATION] ALLOWANCE (RATA) SHOULD BE
On November 5, 2005, Galang filed a Petition for INCLUDED IN THE PAYMENT OF RESPONDENT'S
Review[31] under Rule 43 with the CA. BACKWAGES.

In the assailed Decision dated May 25, 2006, the appellate II.
court granted said petition and declared Galang entitled to
PERA, RATA and other benefits attached to his position. WHETHER OR NOT THE HONORABLE COURT OF APPEALS
However, it upheld his reinstatement on August 16, 2001 HAS LIKEWISE COMMITTED GRAVE AND REVERSIBLE ERROR
and sustained the computation of his back wages based on WHEN IT HELD THAT RESPONDENT GALANG IS STILL
the prevailing rate at the time of his dismissal. The motions ENTITLED TO THE PAYMENT OF MEAL ALLOWANCE AND RICE
for reconsideration respectively filed by Galang and Land SUBSIDY.[33]
Bank were likewise denied by the appellate court in its
Resolution dated October 25, 2006. In order to resolve these twin petitions, the Court must
address the following questions: (1) When should Galang be
Hence, on December 8, 2006, Galang filed a petition for reinstated? (2) What should be the basis of computing his
review on certiorari with this Court raising the following back salaries? and (3) Is he entitled to PERA, RATA, Meal
issues: Allowance and Rice Subsidy?
I. Citing the case of Cristobal v. Melchor,[34] Galang contends
that his back wages should be computed based on the rate of
THE HONORABLE COURT ERRED IN NOT RULING THAT THE his salary at reinstatement.  He argues that since Land Bank
COMPUTATION OF PETITIONER'S BACKWAGES SHOULD BE availed of the wrong remedy, his reinstatement should be
BASED ON HIS CURRENT SALARY LEVEL; AND reckoned from October 1, 1997 or after the reglementary
period to appeal had lapsed.
II.
Land Bank, on the other hand, disputes Galang's demand for
THE HONORABLE COURT ERRED IN NOT RULING THAT
PERA and RATA.  It reasons that since the five-year period
PETITIONER IS ENTITLED TO REINSTATEMENT AS EARLY AS
for which Galang shall receive back salaries is from July 1990
01 OCTOBER 1997.[32]
to June 1995, he is not entitled to PERA, a benefit which
employees of the Land Bank started receiving only in 1997. 
For its part, Land Bank filed a petition for review on certiorari As to RATA, Land Bank maintains that the nature of such
on December 22, 2006 based on the following assignment of benefit precludes Galang from claiming it since he did not
errors: incur expenses for representation and transportation while
he was not allowed to work.  Finally, it claims that it had
I. already paid Galang's Rice Subsidy and Meal Allowance.
 In this case, Land Bank received notice of the CA Resolution
We find the petition partly meritorious. dated September 5, 1997 on September 15, 1997.  Thus, it
had fifteen (15) days from September 15, 1997, or until
The Omnibus Rules Implementing Book V of Executive Order September 30, 1997 to file an appeal. Yet, Land Bank did not
No. 292[35] and Other Pertinent Civil Service Laws define do so. Instead, it filed a petition for certiorari with this Court
reinstatement as the issuance of an appointment to a person on November 14, 1997.
who has been previously appointed to a position in the career
service and who has, through no delinquency or misconduct, However, an original action for certiorari is an independent
been separated therefrom, or to the restoration of one who action and is neither a continuation nor a part of the trial
has been exonerated of the administrative charges filed resulting in the judgment complained of.  It does not
against him. interrupt the course of the original action if there was no writ
of injunction, even if in connection with a pending case in a
In the present case, Galang was absolved of the lower court.[38]  Section 7, Rule 65 on certiorari provides:
administrative charges against him in the CA Decision dated
November 21, 1996.  Upon motion, the appellate court SEC. 7. Expediting proceedings; injunctive relief. - The court
issued the Resolution dated September 5, 1997, which in which the petition is filed may issue orders expediting the
ordered his reinstatement and the payment of his back proceedings, and it may also grant a temporary restraining
salaries for five years. order or a writ of preliminary injunction for the preservation
of the rights of the parties pending such proceedings. The
It is settled that an illegally terminated civil service employee petition shall not interrupt the course of the principal
is entitled to back salaries limited only to a maximum period case unless a temporary restraining order or a writ of
of five years, and not full back salaries from his illegal preliminary injunction has been issued against public
termination up to his reinstatement.[36] Hence, in Galang's respondent from further proceeding in the
case, he is entitled to back salaries from July 1990 to June case. (Emphasis supplied.)
1995.  This is not disputed by the parties.  Rather, the
uncertainty centers on when he should be reinstated. Clearly, the petition for certiorari filed by Land Bank in G.R.
No. 131186 did not suspend the running of the prescriptive
The records show that Galang was reinstated in Land Banks's period to appeal.  Besides, no temporary restraining order or
payroll on August 16, 2001.  He argues, however, that he writ of preliminary injunction was issued in its favor that
should be reinstated on October 1, 1997, after the fifteen could effectively toll the running of the prescriptive period.
(15)-day period to appeal the Resolution dated September 5,
1997 had lapsed. It is true that there are instances where, even if there is no
writ of preliminary injunction or temporary restraining order
Galang's position on the effective date of his reinstatement is issued by a higher court, it would be proper for a lower court
correct. or court of origin to suspend its proceedings on the precept
of judicial courtesy.  The principle of judicial courtesy,
Well-entrenched is that a judgment or order becomes final however, remains to be the exception rather than the rule.
upon the lapse of the period to appeal, without an appeal [39]
  Unfortunately for Land Bank, this is not a proper case for
being perfected or a motion for reconsideration being filed.[37] the operation of the said principle.
Land Bank's failure to interpose an appeal within fifteen (15) position and compensation commensurate and comparable to
days from its receipt on September 15, 1997 of the that which he held, taking into account the increases in
Resolution dated September 5, 1997, rendered the same salary during the fifteen (15)-year period preceding his
final and executory on October 1, 1997.  Galang's reinstatement.  To stress this point, the Court fixed his
reinstatement therefore must be reckoned, not from August compensation at the rate prevailing at the time of his
16, 2001 but from October 1, 1997.  This entitles him to reinstatement inclusive of allowances, benefits and increases
receive back wages as well from the date when he should in salary.  Moreover, it ordered the respondents therein to
have been reinstated on October 1, 1997 to August 15, pay Cristobal the differential between the current rate of the
2001, one day before he was actually reinstated. salary, for a position commensurate to a Private Secretary I,
and the old rate from the time he "reported for duty"[42] that
Concomitant with reinstatement is the payment of back is, from the time he was reinstated.
salaries. Section 59(e) of the Uniform Rules on
Administrative Cases in the Civil Service on the effect of Clearly, what was in issue in Cristobal v. Melchor was the
exoneration on certain penalties provides that in case the rate of Cristobal's compensation upon his reinstatement, not
penalty imposed is dismissal, he shall immediately be the rate of his back salaries.  In fact, he did not dispute the
reinstated without loss of seniority rights with payment of payment of his back salaries for five years computed at the
back salaries. It was enunciated in Philippine Amusement rate when he was dismissed.[43]
and Gaming Corporation v. Salas[40] that:
The controlling rule on the rate at which back salaries shall
When an official or employee was illegally dismissed and his be paid was laid down by the Court as early as 1977 in the
reinstatement has later been ordered, for all legal purposes case of Balquidra v. CFI of Capiz, Branch II. [44]  In said case,
he is considered as not having left his office. Therefore, he is the Court awarded back salaries to the petitioner therein at
entitled to all the rights and privileges that accrue to him by the rate last received by him or his "original salary" [45] for
virtue of the office he held. five years without qualification and deduction.  This means
that the illegally dismissed government employee shall be
In this case, the second issue for resolution pertains to the paid back salaries at the rate he was receiving when he was
base figure to be used in computing Galang's back salaries. terminated unqualified by salary increases and without
deduction from earnings received elsewhere during the
Galang invokes the 1980 case of Cristobal v. Melchor[41] as period of his illegal dismissal.  We have invariably held so
authority in saying that the computation of his back wages in Gementiza v. Court of Appeals,[46] Ginson v. Municipality
should be based on his salary at reinstatement.  However, of Murcia, et al.,[47] Gabriel v. Domingo,[48] and Del Castillo v.
we find Galang's reliance on said case misplaced. Civil Service Commission.[49]  We find no reason to depart
from the said rule in the instant case.
In Cristobal v. Melchor, Jose C. Cristobal was reinstated as
an Assistant in the Office of the President, a position different Be that as it may, we cannot apply the foregoing rule in the
from his position as Private Secretary I which he held when computation of Galang's back salaries from October 1, 1997
he was terminated.  Upon being reinstated, he was paid the to August 15, 2001.  His back salaries for such period
salary corresponding to that of a Private Secretary I at the represent recompense for the earnings he failed to realize
rate when he was wrongfully dismissed fifteen (15) years because he was belatedly reinstated.  Following this Court's
back.  The Court ruled therein that Cristobal must be given a pronouncement in Cristobal v. Melchor, Galang's back
salaries for October 1, 1997 to August 15, 2001 should be government unit shall be absorbed into the basic salary of
computed at the rate prevailing at the proper date of his said official or employee and shall be paid by the National
reinstatement on October 1, 1997, inclusive of allowances, Government.
benefits and increases in salary prior to reinstatement.
Section 17 of the Act, however, exempts incumbent
Apart from back salaries, Galang demands payment of RATA, government officials and employees from the operation of
PERA, Meal Allowance and Rice Subsidy from Land Bank. Section 12, thus:
Back wages represent the compensation that should have SEC. 17. Salaries of Incumbents. - Incumbents of positions
been earned but were not collected because of the unjust presently receiving salaries and additional
dismissal.[50]  This includes other monetary compensation/fringe benefits including those absorbed from
benefits[51] attached to the employee's salary following the local government units and other emoluments, the aggregate
principle that an illegally dismissed government employee of which exceeds the standardized salary rate as herein
who is later reinstated is entitled to all the rights and prescribed, shall continue to receive such excess
privileges that accrue to him by virtue of the office he held. compensation, which shall be referred to as transition
allowance. The transition allowance shall be reduced by the
Pertinent to this case, Republic Act (R.A.) No. 6758, amount of salary adjustment that the incumbent shall
[52]
 otherwise known as the Compensation and Position receive in the future.
Classification Act of 1989, was enacted on July 1, 1989 to
integrate certain benefits received by government official and The transition allowance referred to herein shall be treated
employees into their salaries.  Section 12 of said Act as part of the basic salary for purposes of computing
provides: retirement pay, year-end bonus and other similar benefits.
SEC. 12. Consolidation of Allowances and Compensation. - xxxx
All allowances, except for representation and
transportation allowances; clothing and laundry
allowances; subsistence allowance of marine officers and Being an incumbent at the time, Galang would have
crew on board government vessels and hospital personnel; continued to receive RATA, Meal Allowance and Rice Subsidy,
hazard pay; allowances of foreign service personnel separate from his salary, had he not been illegally dismissed
stationed abroad; and such other additional from service.
compensation not otherwise specified herein as may be
determined by the DBM, shall be deemed included in the Representation and Transportation Allowance or RATA is a
standardized salary rates herein prescribed. Such other fringe benefit distinct from salary. Unlike salary which is paid
additional compensation, whether in cash or in kind, being for services rendered, RATA belongs to a basket of
received by the incumbents only as of July 1, 1989 not allowances to defray expenses deemed unavoidable in the
integrated into the standardized salary rates shall continue to discharge of office.  Hence, it is paid only to certain officials
be authorized. who, by the nature of their offices, incur representation and
transportation expenses.[53]  The Department of Budget and
Existing additional compensation of any national government Management (DBM) Manual on Position Classification and
official or employee paid from local funds of a local Compensation discusses the nature of the RATA and qualifies
the entitlement of reinstated government employees thereto number of work days in a month, inclusive of regular and
in certain fiscal years: special holidays falling on work days. (Emphasis supplied.)

The pertinent general provisions of the General

For emphasis, the five-year period covered in the
Appropriations Acts (GAAs) prior to FY 1993 and in the FY
computation of Galang's back salaries and other benefits is
1999 GAA provided that the officials listed therein and those
from July 1990 to June 1995.  Also, he shall receive back
of equivalent ranks as may be determined by the
salaries and other benefits for the period during which he
Department of Budget and Management (DBM) are to be
should have been reinstated from October 1, 1997 to August
granted monthly commutable RATA. Hence, prior to FY 1993
15, 2001.  Since the General Appropriations Act (GAA) for
and in FY 1999, RATA were allowances attached to the
1993 to 1998 and in the year 2000 onwards require the
position.
actual performance of duty as a condition for the grant of
RATA, Galang shall not receive RATA in those years but shall
The pertinent provisions of the FYs 1993 to 1998 GAAs and
be entitled to RATA only from July 1990 to December 1992
in the FY 2000 GAA provided that the officials listed therein
and in the year 1999.
and those of equivalent ranks as may be determined by the
DBM while in the actual performance of their
On the other hand, Personnel Economic Relief Allowance
respective functions are to be granted monthly
(PERA) is a P500 monthly allowance authorized under the
commutable RATA. This provision was reiterated in the
pertinent general provision in the annual GAA. It is granted
pertinent general provisions of the subsequent GAAs.
to augment the pay of government employees due to the
Hence, in FYs 1993 to 1998 and beginning FY 2000 and
rising cost of living.
up to the present, the actual performance of an
official's duties and responsibilities was a pre-
On February 12, 1997, Congress enacted R.A. No.
requisite to the grant of RATA.
8250[54] (GAA for CY 1997), which granted PERA to all
government employees and officials as a replacement of the
The rationale behind the qualifying phrase, "while in the
Cost of Living Allowance (COLA).[55]  This explains why Land
actual performance of their respective functions," is to
Bank employees began receiving PERA only in 1997 -
provide the official concerned with additional funds to meet
because prior to 1997, said benefit was called by another
necessary expenses incidental to and connected with the
name, COLA.  Hence, Land Bank is still liable to pay the
exercise or the discharge of the functions of the office. Thus,
monthly PERA to Galang.
if the official is out of office, whether voluntary or
involuntary, the official does not and is not supposed to incur
In his Motion for Issuance of Writ of Execution, Galang
expenses. There being no expenses incurred, there is nothing
acknowledges receipt of "Rice Allowance, which was
to reimburse.
monetized based on the value of a sack of rice within the
period from July 1990 to June 1995."[56]  Still, he claims Rice
Since RATA are privileges or benefits in the form of
Subsidy for the succeeding years.  Considering, however,
reimbursement of expenses, they are not salaries or part of
that Galang is entitled to back wages only from July 1990 to
basic salaries. Forfeiture or non-grant of the RATA does
June 1995 and from October 1, 1997 to August 15, 2001, his
not constitute diminution in pay. RATA may be spent in
claim for Rice Subsidy for the intervening years has no legal
variable amounts per work day depending on the situation.
basis.
Entitlement thereto should not be proportionate to the
As to Meal Allowance, Land Bank concedes Galang's and deduction; (b) back salaries from the proper date of his
entitlement thereto, albeit, it claims that it had already paid reinstatement on October 1, 1997 until August 15, 2001, at
the same. the rate prevailing on October 1, 1997 inclusive of increases
in salary; (c) Cost of Living Allowance (COLA) from July 1990
Jurisprudence dictates that the burden of proving payment of to June 1995; (d) Personnel Economic Relief Allowance
monetary claims rests on the employer.  The rationale for (PERA) from October 1, 1997 to August 15, 2001; (e) 
this rule was explained in G & M Philippines, Inc. v. Representation and Transportation Allowance (RATA) from
Cuambot[57]: July 1990 to December 1992 and for the year 1999; (f) Meal
Allowance in the amount of P34,860.00; and (g) Meal
x x x [O]ne who pleads payment has the burden of proving Allowance and Rice Subsidy for October 1, 1997 to August
it. The reason for the rule is that the pertinent personnel 15, 2001.
files, payrolls, records, remittances and other similar
documents - which will show that overtime, differentials, No pronouncement as to costs.
service incentive leave, and other claims of workers have
been paid - are not in the possession of the worker but in the SO ORDERED.
custody and absolute control of the employer. Thus, the
burden of showing with legal certainty that the obligation has
been discharged with payment falls on the debtor, in
accordance with the rule that one who pleads payment has
the burden of proving it. x x x[58]

To prove payment of Galang's meal allowance for 1988 and

July 1990 to 1995 in the amount of P34,860.00, Land Bank
annexed Disbursement Order No. 02-02-0170[59] dated
February 8, 2002 to its Comment[60] in CA-G.R. SP No.
91910.  However, said disbursement order lacks the
signature of Galang as recipient.  Verily, we cannot take such
document as conclusive proof that Galang has been paid his
meal allowance.  Taking into account our determination that
Galang ought to be reinstated earlier, Land Bank shall
likewise be liable to pay his Meal Allowance from October 1,
1997 to August 15, 2001.

WHEREFORE, the Decision dated May 25, 2006 and

Resolution dated October 25, 2006 of the Court of Appeals in
CA-G.R. SP No. 91910 are AFFIRMED WITH
MODIFICATIONS.  Land Bank of the Philippines is ordered
to pay Isabelo L. Galang: (a) back salaries for five (5) years
from the time of his unlawful dismissal in July 1990 to June
1995 at the rate last received by him without qualification