EN BANC
G.R. No. 205837, November 21, 2017
PHILIPPINE INTERNATIONAL TRADING CORPORATION, Petitioner, v. COMMISSION ON AUDIT, Respondent.
D E C I S I O N
LEONARDO-DE CASTRO, J.:
This treats of the petition for certiorari1 filed by Philippine International Trading Corporation (PITC), which seeks to annul and set aside the Decision2 No. 2013-016 dated January 30, 2013 of the Commission on Audit (COA). In the assailed decision, the COA denied PITC's request for the amendment of certain provisions of the 2010 Annual Audit Report (AAR)3 of PITC, which relate to the payment and accrual of liability for retirement benefits under Section 6 of Executive Order No. 756.
The Facts
PITC is a government-owned and controlled corporation that was created under Presidential Decree No. 2524 issued by then President Ferdinand E. Marcos on July 21, 1973. Thereafter, said law was repealed by Presidential Decree No. 1071,5 which was issued on January 25, 1977.
On December 28, 1981, President Marcos issued Executive Order No. 756,6 which authorized the reorganization of PITC. Section 6 thereof states:
SECTION 6. Exemption from OCPC. - In recognition of the special nature of its operations, the Corporation shall continue to be exempt from the application of the rules and regulations of the Office of the Compensation and Position Classification or any other similar agencies that may be established hereafter as provided under Presidential Decree No. 1071. Likewise, any officer or employee who retires, resigns, or is separated from the service shall be entitled to one month pay for every year of service computed at highest salary received including all allowances, in addition to the other benefits provided by law, regardless of any provision of law or regulations to the contrary; Provided, That the employee shall have served in the Corporation continuously for at least two years: Provided, further, That in case of separated employees, the separation or dismissal is not due to conviction for any offense the penalty for which includes forfeiture of benefits: and Provided, finally, That in the commutation of leave credits earned, the employees who resigned, retired or is separated shall be entitled to the full payment therefor computed with all the allowance then being enjoined at the time of resignation, retirement of separation regardless of any restriction or limitation provided for in other laws, rules or regulations. (Emphasis supplied.)On February 18, 1983, President Marcos issued Executive Order No. 877 that further authorized the reorganization of PITC. Section 1 thereof reads:
1. Reorganization. - The Minister of Trade and Industry is hereby designated Chief Executive Officer of the Corporation with full powers to restructure and reorganize the Corporation and to determine or fix its staffing pattern, compensation structure and related organizational requirements. The Chairman shall complete such restructuring and reorganization within six (6) months from the date of this Executive Order. All personnel of the Corporation who are not reappointed by the Chairman under the new reorganized structure of the Corporation shall be deemed laid off; provided, that personnel so laid off shall be entitled to the benefits accruing to separated employees under Executive Order No. 756 amending the Revised Charter of the Corporation. (Emphasis supplied.)Apparently, PITC continued to grant the benefits provided under Section 6 of Executive Order No. 756 to its qualified employees even after the lapse of the six-month period specified in Executive Order No. 877.
As an adjunct to the reorganization mandated under Executive Order No. 756, we find that [Section 6 of Executive Order No. 756] cannot be interpreted independent of the purpose or intent of the law. Rather than the permanent retirement law for its employees that [PITC] now characterizes it to be, we find that the provision of gratuities equivalent to "one month pay for every year of service computed at highest salary received including all allowances" was clearly meant as an incentive for employees who retire, resign or are separated from service during or as a consequence of the reorganization [PITC's] Board of Directors was tasked to implement. As a temporary measure, it cannot be interpreted as an exception to the general prohibition against separate or supplementary insurance and/or retirement or pension plans under Section 28, Subsection (b) of Commonwealth Act No. 186, amended. Pursuant to Section 10 of Republic Act No. 4968 which was approved. on June 17, 1967, said latter provision was amended to read as follows:PITC moved for a reconsideration of the above ruling, but the same was denied in a Resolution dated August 10, 2010. The Decision in G.R. No. 183517 became final on September 27, 2010.Section 10. Subsection (b) of Section twenty-eight of the same Act, as amended is hereby further amended to read as follows:x x x x
(b) Hereafter no insurance or retirement plan for officers or employees shall be created by any employer. All supplementary retirement or pension plans heretofore in force in any government office, agency, or instrumentality or corporation owned or controlled by the government, are hereby declared inoperative or abolished: Provided, That the rights of those who are already eligible to retire thereunder shall not be affected.
The dearth of merit in [PITC's] position is rendered even more evident when it is borne in mind that Executive Order No. 756 was subsequently repealed by Executive Order No. 877 which was issued on February 18, 1983 to hasten the reorganization of [PITC], in light of changing circumstances and developments in the world market. x x x.
x x x x
Specifically mandated to be accomplished within the limited timeframe of six months from the issuance of the law, the reorganization under Executive Order No. 877 clearly supplanted that which was provided under Executive Order No. 756. Nowhere is this more evident than Section 4 of said latter law which provides that, "All provisions of Presidential Decree No. 1071 and Executive Order No. 756, as well as of other laws, decrees, executive orders or issuances, or parts thereof that are in conflict with this Executive Order, are hereby repealed or modified accordingly." In utilizing the computation of the benefits provided under Section 6 of Executive Order No. 756 for employees considered laid off for not being reappointed under [PITC's] new reorganized structure, Executive Order No. 877 was correctly interpreted by [the COA] to evince an intent not to extend said gratuity beyond the six-month period within which the reorganization is to be accomplished.
x x x x
It doesn't help [PITC's] cause any that Section 6 of Executive Order No. 756, in relation to Section 3 of Executive Order No. 877, was further amended by Republic Act No. 6758, otherwise known as the Compensation and Classification Act of 1989. Mandated under Article IX B, Section 5 of the Constitution, Section 4 of Republic Act No. 6758 specifically extends its coverage to government owned and controlled corporations like [PITC]. With this Court's ruling in Philippine International Trading Corporation v. Commission on Audit to the effect that [PITC] is included in the coverage of Republic Act No. 6758, it is evidently no longer exempted from OCPC rules and regulations, in keeping with said law's intent to do away with multiple allowances and other incentive packages as well as the resultant differences in compensation among government personnel.8 (Emphasis supplied, citations omitted.)
1. Estimated liability for employees' benefits account balance of P52.70 million was misstated by P46.36 million because management erroneously accrued retirement benefits provided under Section 6 of EO 756. Payments of such benefits to employees retiring after the 1983 reorganization were, likewise, without legal basis.In a letter10 dated June 22, 2012 to the COA Commission Proper, PITC sought the amendment of the 2010 AAR. PITC averred that the Decision in G.R. No. 183517 must be applied prospectively, such that all qualified PITC employees should be allowed to claim their vested rights to the benefits under Section 6 of Executive Order No. 756 upon retirement or resignation, and the computation thereof must be from the time of their employment until September 27, 2010 when the Decision became final.
xxxx 1.7 We did not agree with the view of Management on the matter and we reiterated our recommendation that management stop the payment and the accrual of liability for retirement benefits computed in accordance with Section 6 of EO 756 and de recognize or reverse the amount already accrued, closing it to the Retained earnings account.9 (Underscoring omitted.)
WHEREFORE, premises considered, the request is DENIED and the assailed observation in the 2010 AAR of the PITC STANDS.11PITC, thus, filed the present petition for certiorari.
We first address the failure of the PITC to file a motion for reconsideration of the assailed decision.In the present case, the same situation is availing in that the issue presented in this case is purely of law, i.e., whether the Decision in G.R. No. 183517 should be applied prospectively upon its finality, and the same had already been squarely addressed by the COA in its assailed ruling.
As a general rule, a petition for certiorari before a higher court will not prosper unless the inferior court has been given, through a motion for reconsideration, a chance to correct the errors imputed to it. This rule, though, has certain exceptions: (1) when the issue raised is purely of law, (2) when public interest is involved, or (3) in case of urgency. As a fourth exception, it was also held that the filing of a motion for reconsideration before availment of the remedy of certiorari is not a condition sine qua non, when the questions raised are the same as those that have already been squarely argued and exhaustively passed upon by the lower court.
In the case at bar, a motion for reconsideration may be dispensed with not only because the issue presented is purely of law, but also because the question raised has already been extensively discussed in the decisions of the Director, Corporate Audit Office II and the COA.12 (Citation omitted; emphasis supplied.)
Decisions of this Court, although in themselves not laws, are nevertheless evidence of what the laws mean, and this is the reason why under Article 8 of the New Civil Code, 'Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system x x x.' The interpretation upon a law by this Court constitutes, in a way, a part of the law as of the date that law was originally passed, since this Court's construction merely establishes the contemporaneous legislative intent that the law thus construed intends to effectuate. x x x. (Emphasis supplied.)PITC argues, however, that the COA erred in relying on the second sentence in the above excerption from Jabinal, which PITC dismissed as a "simple statement" that was "just an obiter dictum or an incidental remark that this Honorable Court made in passing."16
That the decision of the Municipal Council of Sibonga was issued before the decision in Festejo v. Mayor of Nabua was rendered, would be, at the most, proof of good faith on the part of the police committee, but can not sustain the validity of their action. It is elementary that the interpretation placed by this Court upon Republic Act [No.] 557 constitutes part of the law as of the date it was originally passed, since this Court's construction merely establishes the contemporaneous legislative intent that the interpreted law carried into effect.20 (Emphasis supplied.)The above ruling had since become the established doctrine on the matter of the effectivity of judicial interpretations of statutes.
Article 4 of the Civil Code provides that "(l)aws shall have no retroactive effect, unless the contrary is provided.["] Correlatively, Article 8 of the same Code declares that "(j)udicial decisions applying the laws or the Constitution shall form part of the legal system of the Philippines."Applying the foregoing disquisition to the present case, the Court disagrees with PITC's position that the Decision in G.R. No. 183517 should be applied prospectively.
Jurisprudence, in our system of government, cannot be considered as an independent source of law; it cannot create law. While it is true that judicial decisions which apply or interpret the Constitution or the laws are part of the legal system of the Philippines, still they are not laws. Judicial decisions, though not laws, are nonetheless evidence of what the laws mean, and it is for this reason that they are part of the legal system of the Philippines. Judicial decisions of the Supreme Court assume the same authority as the statute itself.
Interpreting the aforequoted correlated provisions of the Civil Code and in light of the above disquisition, this Court emphatically declared in Co vs. Court of Appeals, et al. that the principle of prospectivity applies not only to original amendatory statutes and administrative rulings and circulars, but also, and properly so, to judicial decisions. x x x.
x x x x
The reasoning behind Senarillos vs. Hermosisima that judicial interpretation of a statute constitutes part of the law as of the date it was originally passed, since the Court's construction merely establishes the contemporaneous legislative intent that the interpreted law carried into effect, is all too familiar. Such judicial doctrine does not amount to the passage of a new law but consists merely of a construction or interpretation of a pre-existing one, x x x.
It is consequently clear that a judicial interpretation becomes a part of the law as of the date that law was originally passed, subject only to the qualification that when a doctrine of this Court is overruled and a different view is adopted, and more so when there is a reversal thereof, the new doctrine should be applied prospectively and should not apply to parties who relied on the old doctrine and acted in good faith. To hold otherwise would be to deprive the law of its quality of fairness and justice then, if there is no recognition of what had transpired prior to such adjudication. (Emphasis supplied, citations omitted.)
The Court has previously held that practice, no matter how long continued, cannot give rise to any vested right if it is contrary to law. The erroneous application and enforcement of the law by public officers does not estop the Government from making a subsequent correction of such errors. Where the law expressly limits the grant of certain benefits to a specified class of persons, such limitation must be enforced even if it prejudices certain parties due to a previous mistake committed by public offiCials in granting such benefit. (Citations omitted.)In this case, the Court already ruled in G.R. No. 183517 that the grant of the retirement benefits under Section 6 of Executive Order No. 756 was temporary and limited in nature and the same should have been restricted to the six-month period of the mandated reorganization of PITC.
Endnotes:
** Per Special Order No. 2519 dated November 21, 2017.
1Rollo, pp. 3-14.
2 Id. at 15-20; signed by Commissioners Ma. Gracia M. Pulido Tan, Juanito G. Espino, Jr., and Heidi L. Mendoza.
3 Id. at 21-26.
4 The Philippine International Trading Corporation Law.
5 The Revised Charter of the Philippine International Trading Corporation.
6 Authorizing the Reorganization of the Philippine International Trading Corporation.
7 635 Phil. 447 (2010).
8 Id. at 457-464.
9Rollo, pp. 25-26.
10 Id. at 27-30.
11 Id. at 19.
12Philippine International Trading Corporation v. Commission on Audit, 461 Phil. 737, 745 (2003).
13Philippine Long Distance Telephone Company v. Alvarez, 728 Phil. 391, 416 (2014).
14 298 Phil. 221, 228-229 (1993).
15 154 Phil. 565, 571 (1974).
16Rollo, p. 235.
17 100 Phil. 501 (1956).
18 Entitled "An Act Providing for the Suspension or Removal of Members of the Provincial Guards, City Police and Municipal Police by the Provincial Governor, City Mayor or Municipal Mayor." Approved on June 17, 1950.
19 96 Phil. 286 (1954).
20Senarillos v. Hermosisima, supra note 17 at 504.
21 329 Phil. 875, 905-908 (1996).
22Co v. Court of Appeals, supra note 14.
23 238 Phil. 155 (1987).
24 480 Phil. 861, 885-886 (2004), citing Baybay Water District v. Commission on Audit, 425 Phil. 326, 341-342 (2002).