THIRD DIVISION
G.R. No. 195687, April 14, 2014
LAND BANK OF THE PHILIPPINES, Petitioner, v. DAVID G. NAVAL, JR., JOSE SALVANTE S. ANTE, ALVIN O. ARRIZA, JACINTO Y. MANALO, RAMON D. SIAO, AND ALLAN E. BENUSA, IN THEIR OWN NAMES AND IN BEHALF OF THE OFFICERS AND EMPLOYEES, BOTH INCUMBENT AND RETIRED, OF LAND BANK OF THE PHILIPPINES, Respondents.
GENEROSO DAVID AND OTHER LAND BANK OFFICERS AND EMPLOYEES, REPRESENTED BY DAVID CUI–DAVID BUENAVENTURA AND ANG LAW OFFICES, Intervenors.
EDWIN A. ILAGAN, MARY GRACE L. SALTING, IMELDA B. MOLOD, MA. CARMEN B. BERAQUIT, MA. SOCORRO N. REGALA, GERRY P. SALTING, REGGIE D. ABIOG, ESTHER S. VILLAR, GWENDOLYN B. DOMETITA, THERESA G. ENDAYA, MERFE F. DAGNALAN, ANTONETTE F. BALGEMINO, CELESTE R. CABATINGAN, AMELIA G. JIMENEZ, CARLOS B. FLORIN JR., DOROTHY MAY E. EMPLEO, JESUS D. EMPLEO, MILDRED BONOS, MARIBEL G. HALDOS, CHOLITA B. SESNO, CHONA LUDDIE BARELA, AND GRACE L. CRUZ, Intervenors
R E S O L U T I O N
VELASCO JR., J.:
Section 12. Consolidation of Allowances and Compensation. – All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.
Existing additional compensation of any national government official or employee paid from local funds of a local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by the National Government. (underscoring supplied)
WHEREFORE, Judgment is rendered requiring respondents to pass and issue a board resolution:
- Directing the payment of Cost of Living Allowance (COLA) in the amount of P300.00 or forty percent (40%) of the respective basic salaries of petitioners per month whichever is higher, effective May 16, 1989 up to the present;
- Directing the payment of Bank Equity Pay (BEP) amounting to ?550.00 per month for those receiving P1,500.00 and below as basic salary per month and ?500.00 per month for those receiving more than P1,500.00 per month from July 1, 1989 up to the present; and
- Directing the payment of interest amounting to six percent (6%) per year on all the amounts due to petitioners effective May 16, 1989 in the case of COLA and July 1, 1989 in the case of BEP up to August 18, 1999, (the date of extra–judicial demand), and twelve (12%) from August 19, 1999 up to the present or until fully paid.20
WHEREFORE, the assailed Decision dated June 7, 2004 rendered by the Regional Trial Court (RTC) of Manila (Branch 40), in Special Civil Action No. 02–104483, is hereby AFFIRMED with modification that:
Land Bank of the Philippines is hereby DIRECTED to pay an interest of six percent (6%) per annum on all the amounts due to petitioners–appellees effective May 16, 1989, in the case of Cost of Living Allowance (COLA), and July 1, 1989, in the case of Bank Equity Pay (BEP), up to the finality of this Decision, which interest rate should become twelve percent (12%) per annum from the finality of this Decision up to its satisfaction.
We hold that Rep. Act No. 6758 (Compensation and Classification Act of 1989) can be implemented notwithstanding our ruling in De Jesus vs. Commission on Audit. While it is true that in said case, this Court declared the nullity of DBM–CCC No. 10, yet there is nothing in our decision thereon suggesting or intimating the suspension of the effectivity of Rep. Act No. 6758 pending the publication in the Official Gazette of DBM–CCC No. 10. For sure, in Philippine International Trading Corporation vs. Commission on Audit, this Court specifically ruled that the nullity of DBM–CCC No. 10 will not affect the validity of Rep. Act No. 6758. Says this Court in that case:x x x The nullity of DBM–CCC No. 10, will not affect the validity of R.A. No. 6758. It is a cardinal rule in statutory construction that statutory provisions control the rules and regulations which may be issued pursuant thereto. Such rules and regulations must be consistent with and must not defeat the purpose of the statute. The validity of R.A. No. 6758 should not be made to depend on the validity of its implementing rules. (Emphasis and underscoring supplied.)
Section 12. Consolidation of Allowances and Compensation. – All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed. Such other additional compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized.
Existing additional compensation of any national government official or employee paid from local funds of a local government unit shall be absorbed into the basic salary of said official or employee and shall be paid by the National Government. (underscoring supplied)
At the heart of the present controversy is Section 12 of R.A. 6758 which is quoted anew for clarity:
x x x x
But, while the provision enumerated certain exclusions, it also authorized the DBM to identify such other additional compensation that may be granted over and above the standardized salary rates. In Philippine Ports Authority Employees Hired After July 1, 1989 v. Commission on Audit, the Court has ruled that while Section 12 could be considered self–executing in regard to items (1) to (6), it was not so in regard to item (7). The DBM still needed to amplify item (7) since one cannot simply assume what other allowances were excluded from the standardized salary rates. It was only upon the issuance and effectivity of the corresponding implementing rules and regulations that item (7) could be deemed legally completed.
x x x x
In this case, the DBM promulgated NCC 59 [and CCC 10]. But, instead of identifying some of the additional exclusions that Section 12 of R.A. 6758 permits it to make, the DBM made a list of what allowances and benefits are deemed integrated into the standardized salary rates. More specifically, NCC 59 identified the following allowances/additional compensation that are deemed integrated:
x x x x
The drawing up of the above list is consistent with Section 12 above. R.A. 6758 did not prohibit the DBM from identifying for the purpose of implementation what fell into the class of “all allowances.” With respect to what employees’ benefits fell outside the term apart from those that the law specified, the DBM, said this Court in a case, needed to promulgate rules and regulations identifying those excluded benefits. This leads to the inevitable conclusion that until and unless the DBM issues such rules and regulations, the enumerated exclusions in items (1) to (6) remain exclusive. Thus so, not being an enumerated exclusion, COLA is deemed already incorporated in the standardized salary rates of government employees under the general rule of integration.
In any event, the Court finds the inclusion of COLA in the standardized salary rates proper. In National Tobacco Administration v. Commission on Audit, the Court ruled that the enumerated fringe benefits in items (1) to (6) have one thing in common—they belong to one category of privilege called allowances which are usually granted to officials and employees of the government to defray or reimburse the expenses incurred in the performance of their official functions. Consequently, if these allowances are consolidated with the standardized salary rates, then the government official or employee will be compelled to spend his personal funds in attending to his duties. On the other hand, item (7) is a “catch–all proviso” for benefits in the nature of allowances similar to those enumerated.
Clearly, COLA is not in the nature of an allowance intended to reimburse expenses incurred by officials and employees of the government in the performance of their official functions. It is not payment in consideration of the fulfillment of official duty. As defined, cost of living refers to “the level of prices relating to a range of everyday items” or “the cost of purchasing those goods and services which are included in an accepted standard level of consumption.” Based on this premise, COLA is a benefit intended to cover increases in the cost of living. Thus, it is and should be integrated into the standardized salary rates.x x x x
[T]he integration of COLA into the standardized salary rates is not dependent on the publication of CCC 10 and NCC 59. This benefit is deemed included in the standardized salary rates of government employees since it falls under the general rule of integration—“all allowances.”
Letter of Instruction No. 116
GRANTING A COST OF LIVING ALLOWANCE
TO GOVERNMENT EMPLOYEES
WHEREAS, the energy crisis has brought about world–wide inflation and tremendously increased cost of living in the country;
WHEREAS, it is the policy of government to help augment government personnel income in times of economic crisis and inflation;
WHEREAS, P.D. No. 985 empowered the President to determine the compensation of government employees;
NOW THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the power vested in me by law, do hereby Direct and Order:
- Each and every official/employee of the National Government, including state universities and colleges, whether permanent, temporary, emergency, contractual or casual, shall be granted a cost of living allowance of P3.35 a day or P100 per month in the case of daily or monthly employees, respectively.
- Local government units may grant full or in part the cost of living allowance authorized under this Letter to their employees, subject to the limits of their financial position and under such conditions as may be determined by the Joint Commission on Local Government Personnel Administration.
- The Compensation Committee created by P.D. No. 985 for government owned or controlled corporation shall immediately meet and determine compensation increases for their respective groups. No government owned or controlled corporations may authorize and implement any increase in salary/allowances/benefits without the approval of the Compensation Committee concerned. The following guidelines shall be observed by the Committees in their work:
- The cost of living allowance directed by this Letter for national government employees may be authorized for employees of government owned or controlled corporations;
- In lieu of the cost of living allowance and where corporate finances permit, the Compensation Committee may instead adopt measures for compensation increase that are consistent with and do not exceed the limits agreed upon for private enterprises in the 1980 Tri–Sectoral Meeting;
x x x x- Payment of half of the living allowance herein directed shall be made effective February 1, 1980 and the other half, effective August 1, 1980.54
Section 16. Repeal of Special Salary Laws and Regulations.—All laws, decrees, executive orders, corporate charters, and other issuances or parts thereof, that exempt agencies from the coverage of the System, or that authorize and fix position classification, salaries, pay rates or allowances of specified positions, or groups of officials and employees or of agencies, which are consistent with the System, including the proviso under Section 2, and Section 16 of Presidential Decree No. 985 are hereby repealed.
x x x Provided, that notwithstanding a standardized salary system established for all employees, additional financial incentives may be established by government corporations and financial institutions for their employees to be supported fully from their corporate funds and for such technical positions as may be approved by the President in critical government agencies. (emphasis supplied)
SECTION 1. Coverage. – This [MO] shall cover profit–making and financially viable [GOCCs] which are not receiving subsidies for any operating expenses from the National Government.
SECTION 2. Allowances of Incumbents. – Incumbents of positions in corporate entities covered by this [MO] who are presently receiving additional monthly compensation/fringe benefits and other emoluments x x x shall continue to receive such excess allowance, which shall be referred to as “transition allowance”. The “transition allowance” shall be correspondingly reduced by the amount of any salary increase or salary adjustment that the incumbent shall receive in the future.
x x x x
SECTION 3. Compliance with Legal Requirements. – All government–owned or controlled corporations are henceforth required to comply strictly with the laws, rules and regulations governing the grant of salary increases, allowances and other benefits to their officials and employees. The head of the corporation shall be held responsible for any unauthorized grant without prejudice to requiring the refund by the employees concerned. (emphasis supplied)
Sec. 10. Section 90 of the same Act is hereby amended to read as follows:
x x x x
“All positions in the Bank shall be governed by a compensation, position classification system and qualification, standards approved by the Bank’s Board of Directors based on a comprehensive job analysis and audit of actual duties and responsibilities. The compensation loan shall be comparable with the prevailing compensation plans in the private sector and shall be subjected to periodic review by the Board no more than once every two (2) years without prejudices to yearly merit reviews or increases based on productivity and profitability. The bank shall therefore be exempt from existing laws, rules and regulations on compensation, position classification and qualification standards. It shall however endeavor to make its system conform as closely as possible with the principle under Republic Act No. 6758.” (emphasis supplied)
[T]he five–year period covered in the computation of Galang’s back salaries and other benefits is from July 1990 to June 1995. Also, he shall receive back salaries and other benefits for the period during which he should have been reinstated from October 1, 1997 to August 15, 2001.
On the other hand, x x x (PERA) is a ?500 monthly allowance authorized under the pertinent general provision in the annual GAA. It is granted to augment the pay of government employees due to the rising cost of living.
On February 12, 1997, Congress enacted R.A. No. 8250 (GAA for CY 1997), which granted PERA to all government employees and officials as a replacement of the Cost of Living Allowance (COLA). This explains why Land Bank employees began receiving PERA only in 1997—because prior to 1997, said benefit was called by another name, COLA. Hence, Land Bank is still liable to pay the monthly PERA to Galang. (emphasis supplied)
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 and deduction; (b) back salaries from the proper date of his reinstatement on October 1, 1997 until August 15, 2001, at the rate prevailing on October 1, 1997 inclusive of increases in salary; (c) Cost of Living Allowance (COLA) from July 1990 to June 1995; (d) Personnel Economic Relief Allowance (PERA) from October 1, 1997 to August 15, 2001 x x x.
Endnotes:
1Rollo, pp. 350–382.
2 Id. at 349.
3 Id. at 12–34, 101–122. Penned by Associate Justice Franchito N. Diamante and concurred in by Associate Justices Josefina Guevara–Salonga and Mariflor P. Punzalan Castillo.
4 Id. at 36–39, 125–128.
5 Id. at 129–132. The pertinent provisions of LOI 104 provides:WHEREAS, pursuant to the mandate of the Constitution, Presidential Decree No. 985 was issued to standardize compensation of government officials and employees, including those in government–owned and controlled corporations, taking into account the nature of the responsibilities pertaining to, and the qualifications required for, the positions concerned;6 Id. at 133–134.
WHEREAS, the said Decree authorized the adoption of additional financial incentives for viable and profit–making corporations and those performing critical functions, to be supported from the earnings and profits of such corporations;
x x x x
5. Maximum Level of Allowance and Benefits. – Allowances and benefits may be provided by individual corporations but not to exceed the following schedule, subject to aggregate ceiling indicated in Item No. 6 hereof:
a. Cost of living allowance of 40% of basic pay or P300 per month, whichever is higher. x x x
7 Id. at 186.
8 Id. at 135, 188. The Resolution pertinently reads:RESOLVED, as it is hereby resolved, That consistent with the proposal of the heads of the GFIs for a uniform approach in the administration of the compensation package for GFI’s employees, the recommendation to integrate into the basic pay of the Cost of Living Allowance (COLA) of ?300.00 or 40% of basic pay, whichever is higher, similar to the Bank Equity Pay (BEP) of CB and Bank Equity Benefit Differential Pay (BEBDP) of DBP to take effect at the start of the month following approval hereof be, as it is hereby, approved, subject to clearance from the Department of Budget and Management;9 Id. at 186, 188. Pursuant to Executive Order No. 11, Series of 1989 [July 4, 1989], entitled “Implementing Guidelines on COLA Integration Approved Under Board Resolution No. ‘88–109.”
RESOLVED FURTHER, That as a result of the COLA integration, the recommendation that the hiring rate will now be step 8 be, as it is hereby likewise, approved;
RESOLVED FINALLY, That the budget for the incremental cost of this integration estimated at P471.41 thousand per month be properly funded, chargeable against corporate funds.
10 Id. at 143–153, 186.
11 DBM CCC No. 10 provides in part:
4.0 The present salary of an incumbent for purposes of this circular shall refer to the sum total of actual basic salary including the allowances enumerated hereunder, being received as of June 30, 1989 and certified and authorized by the DBM .
4.1.1 Cost of Living Allowance (COLA)/Bank Equity Pay equivalent to forty percent (40%) of basic salary or P300.00 per month, whichever is higher.
x x x x
4.1.3 COLA granted to GOCCs/GFIs covered by the Compensation and Position Classification Plan for the regular agencies/offices of the National Government and to GOCCs/GFIs following the Compensation and Position Classification under LOImp. No. 104/CCC No.1 and LOImp. 97/CCC No. 2, in the amount of P550.00 per month for those whose basic salary is P1,500.00 and below, and P500.00 for those whose monthly basic salary is P1,501.00 and above, granted on top of the COLA/BEP mentioned in Item 4.1.1 above;
x x x x
4.2 Allowances enumerated above are deemed integrated into the basic salary for the position effective July 1, 1989.
x x x x
5.6 Payment of other allowances/fringe benefits on top of basic salary, whether in cash or in kind, not mentioned in Sub–Paragraphs 5.4 and 5.5 above shall be discontinued effective November 1, 1989. Payment made for such allowances/fringe benefits after said date shall be considered as illegal disbursement of public funds.
12Rollo, p. 186.
13 G.R. No. 109023, August 12, 1998, 294 SCRA 152.
14Rollo, pp. 156–160.
15 Id. at 194.
16 Id. at 54, 194.
17 Id. at 164–178.
18To support their claim, respondents cited the cases following cases: Philippine Ports Authority v. Commission on Audit (G.R. No. 100773, October 12, 1992, 214 SCRA 653); Manila International Airport Authority v. Commission on Audit (G.R. No. 104217, December 5, 1994, 238 SCRA 714); Philippine International Trading Corporation v. Commission on Audit (G.R. No. 132593, June 25, 1999, 309 SCRA 177); and National Tobacco Administration v. Commission on Audit (G.R. No. 119385, August 5, 1999, 311 SCRA 1999). Respondents are of the position that these cases confirm that employees of GOCCs and GFIs whose allowances were withheld pursuant to DBM–CCC No. 10 are entitled to the restoration of the same from the time their allowances were disallowed or discontinued up to fifteen (15) days from the publication of DBM–CCC No. 10 in the Official Gazette.
19Rollo, pp. 183–200.
20 Id. at 200.
21 Id. at 211–232.
22 Id. at 243–248, in its Order dated August 10, 2004.
23 Id. at 251–254. As narrated by the Court of Appeals, after the RTC rendered its June 7, 2004 Decision, the court a quo likewise ordered its immediate execution in a Special Order dated July 22, 2005. In a Resolution dated August 11, 2005, however, the CA issued a TRO to enjoin the execution of the RTC Decision. Later, in its Decision dated September 27, 2005, the CA granted LBP’s petition for certiorari with prayer for the issuance of a TRO and/or preliminary injunction (docketed as CA–GR SP No. 90807) and directed the RTC to refrain from implementing and enforcing its June 7, 2004 Decision and July 22, 2005 Special Order.
24 Id. at 282–326.
25 Id. at 274–281.
26 Id. at 12–34, 101–122.
27 Id. at 25, 113.
28 Id. at 26, 114; emphasis supplied.
29 Id. at 28, 116.
30 Id. at 327–345.
31 Id. at 36–39; 125–128.
32 Id. at 68.
33 G.R. No. 153266, March 18, 2010, 616 SCRA 1.
34Rollo, pp. 69–70.
35 Id. at 81–82.
36 Id. at 349.
37 Id. at 350–382.
38 G.R. No. 175276, May 31, 2011, 649 SCRA 574.
39Rollo, pp. 366–367.
40 Id. at 419–670.
41 Id. at 671–672.
42 Respondents later asserted that the Comments were directed at the “Petition” not the “Omnibus Motion”; id. at. 751–762, 778–779.
43 Id. at 673–699.
44 Id. at 716–731.
45 Id. at 736–747.
46 Id. at 748–750.
47 Id. at 80–784; 792–879.
48 Id. at 785–787.
49 Id. at 889–907.
50 G.R. No. 157492, March 10, 2006, 484 SCRA 396.
51 G.R. No. 185806, July 24, 2012, 677 SCRA 371, 382.
52 Emphasis supplied.
53Philippine National Bank v. Palma, G.R. No. 157279, August 9, 2005, 466 SCRA 307.
54Rollo, pp. 133–134.
55 See Tejada v. Domingo, G. R. No. 91860 January 13, 1992, 205 SCRA 138.
56 The Whereas Clauses of LOI No. 104 state: “WHEREAS, pursuant to the mandate of the Constitution, Presidential Decree No. 985 was issued to standardize compensation of government officials and employees, including those in government–owned or controlled corporations, taking into account the nature of the responsibilities pertaining thereto, and the qualifications required for the positions concerned;
WHEREAS, the said Decree authorize the adoption of additional financial incentives for viable and profit–making corporations and those performing critical functions, to be supported from the net earnings and profits of such corporations.”
Similarly, the 3rd Whereas Clause of LOI No. 116 provides: “WHEREAS, P.D. No. 985 empowered the President to determine the compensation of government employees.”
57 In fact, the allowances given to GOCCs and GFIs had already been tempered.
58 See Cruz, Carlo L., The Law of Public Officers 146 (2003); citing Mechem, A Treatise on the Law of Public Officers and Officers, Chapter I, Section 856.
59 In fact, after this Court’s promulgation of De Jesus, DBM itself, in its Budget Circular 2001–03 dated November 12, 2001, had reaffirmed the fact of consolidation of the COLA and similar allowances in the basic salaries of GFI employees, as mandated by Section 12 of the SSL. To order the payment of the COLA and BEP on top of the basic salary, even if warranted, should not have been allowed beyond the effectivity of DBM–CCC No. 10.
60 G.R. No. 157279, August 9, 2005, 466 SCRA 307.
61 Id. at 326.
62Gutierrez v. DBM, supra note 33, at 24