judicial recourse and review.pdf

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ADMINISTRATIVE LAW JUDICIAL RECOURSE AND REVIEW PUP-COLLEGE OF LAW

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EMERSON B. BAGONGAHASAvs. G.R. No. 179844 March 23, 2011

Before this Court is a Consolidated Petition for Review on Certiorari1under Rule 45 of the Rules of Civil Procedure, seeking the

reversal of the Court of Appeals (CA) Decision2dated May 31, 2007 and its Amended Decision (Partial)3dated September 25,

2007.

The facts, as summarized by the Department of Agrarian Reform Adjudication Board (DARAB) and as quoted by the CA, are as

follows:

It appears that Complainants Johanna L. Romualdez; Dietmar L. Romualdez; Sps. Daniel and [Ana] Romualdez and

Jacquelin[e] C. (sic) Romualdez are absolute and lawful owners of separate parcels of lands, each parcel with an area of 36,670

square meters, 47,187.50 square meters and 55,453 square meters, respectively, all situated [in] Sitio Papatahan, Paete, Laguna.

Johanna and Dietmar purchased their properties from Roberto Manalo on January 6, 1994; while Sps. Daniel and [Ana], as well

as Jacqueline bought their landholdings from Leonisa A. Zarraga on August 5, 1998. They allege that the said properties are

planted [with] different fruit-bearing trees. They and their predecessors-in-interest have been paying realty taxes due on the

properties up to the present. However, sometime in 1994 and 1995, the then Secretary of Agrarian Reform declared the property

to be part of the public domain, awarded the same to the Defendants and forthwith issued Certificates of Land Ownership Award

(CLOAs) to the respective defendants as follows:

CLOA NO. BENEFICIARIES Date of Registration

In Registry of Deeds of Laguna

1. 00155653 Emerson Bagongahasa, April 10, 1995 et al.

2. 00155652 Cesar Caguin, et al. April 10, 1995

3. 00119810 Sotela Adea, et al. June 30, 1994

It was only in 1998 when the complainants learned of the issuance of said CLOAs by the Register of Deeds of Siniloan, Laguna.

The Complainants pointed out that while the Defendants respective CLOAs describe a property purportedly located in Sitio

Lamao, San Antonio, Municipality of Kalayaan, Province of Laguna, each of the Complainants tax declaration describes a

property located [in] Sitio Papatahan, Municipality of Paete, Province of Laguna. Inspite of the discrepancy in the municipalityand sitio of the respective documents, the lots described in the CLOAs and in the Tax Declarations are almost identical, except

that the property described in Defendants title covers a larger area, but the title and the tax declaration refer to the same lot;

that they and their predecessors-in-interest have been in possession of the properties for more than thirty years; that the

Defendants have never been in possession of the same; that they have not paid any real estate taxes and have not caused the

issuance of a tax declaration over the property in their names; that there is no basis for the award of certificates of land

ownership to the Defendants by the Secretary of Agrarian Reform, for the lands have already become private properties by virtue

of the open, continuous, exclusive and notorious possession of the property by the Complainants and/or their predecessors-in-

interest which possession was in the concept of an owner. As absolute and lawful owners thereof, the complainants also maintain

that they have not been notified of any intended coverage thereof by the DAR; that to the best of their knowledge, there is no

valuation being conducted by the Land Bank of the Philippines and the DAR involving the property; that there was no

compensation paid and that the DAR-CENRO Certification shows that the landholdings have 24-32% slopes and therefore

exempt from CARP coverage.

The complainants[,] thus, pray for the reconveyance of their respective landholdings; cancellation of the CLOAs and payment of

litigation fee.

On the other hand, the Defendants specifically denied the allegations of the Plaintiff, maintaining in their Affirmative Defenses

that they are farmer beneficiaries of the subject properties, covered by Proclamation No. 2280 (sic) which reclassifies certain

portion of the public domain as agricultural land and declares the same alienable and disposable for agricultural and

resettlement purposes of the Kilusang Kabuhayan at Kaunlaran Land Resource Management Program of the KKK, Ministry of

Human Settlements and the area covered is Barangay Papatahan, Paete; that the Plaintiffs act of questioning the issuance of

title is an exercise in futility because Defendants were already in possession of the properties prior to said Proclamation; that
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upon the issuance of the CLOAs, they became the owners of the landholdings and that the complainants claim for damages has

no basis.

On the part of public Respondent PARO, he invoked the doctrine of regularity in the performance of their official functions and

their adherence in pursuing the implementation of CARP. He claims that DAR received from the National Livelihood Support

Fund (NLSF) portions of the public domain covered by Presidential Proclamation No. 2282, Series of 1983 and has been

mandated to implement the agrarian reform laws by distributing alienable and disposable portions of the public domain, to

which the subject lands fall; that actual investigation, proper screening of applicants-beneficiaries, survey and proper evaluation

were conducted, warranting the generation of the CLOAs and that the registration of the CLOAs with the Registry of Deedbrought the same under the coverage of the Torrens System of land registration and have already become indefeasible or

uncontestable.4

On December 28, 2000, the Provincial Agrarian Reform Adjudicator (PARAD) of Laguna rendered his decision,5finding that the

Department of Agrarian Reform (DAR) Secretary committed a mistake in placing the subject properties under the

Comprehensive Agrarian Reform Program (CARP). Moreover, the PARAD found that no notice of coverage was sent to

respondents and that they were also not paid any just compensation. The dispositive portion of the said decision reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering the cancellation of Certificate of Land Ownership Award (CLOA) NOS. 00155653, 00155652 and 00119810

issued to herein private respondents; [and]

2. Ordering the Register of Deeds of Siniloan, Laguna to cause the cancellation of the Certificate of Land Ownership

Award (CLOA) to herein named defendants.

SO ORDERED.6

Aggrieved, petitioners appealed to the DARAB.

In its decision7dated May 3, 2005, the DARAB held that the complaints filed were virtual protests against the CARP coverage, to

which it has no jurisdiction. The DARAB further held that, while it has jurisdiction to cancel the Certificate of Land Ownership

Awards (CLOAs), which had been registered with the Register of Deeds (RD) of Laguna, it cannot pass upon matters exclusively

vested in the DAR Secretary. Moreover, the DARAB ruled that the assailed CLOAs having been registered in 1994 and 1995

became incontestable and indefeasible. Thus:

WHEREFORE, premises considered, the appealed decision is hereby REVERSED and/or SET ASIDE. A new judgment is hereby

entered:

1. Sustaining the validity of the subject Certificates of Land Ownership Award (CLOAs) Nos. 00155653, 00155652 and

00119810 issued to the herein Defendants-Appellants: and

2. Dismissing the instant complaints for lack of merit.

No costs.

SO ORDERED.8

Respondents filed a Motion for Reconsideration, which the DARAB, however, denied for lack of merit.9Thus, respondents

sought recourse from the CA.

On May 31, 2007, the CA, invoking Section 1 (1.6), Rule II of the 2003 DARAB Rules of Procedure,10held that the DARAB has

the exclusive original jurisdiction to determine and adjudicate cases involving correction, partition, and cancellation of

Emancipation Patents and CLOAs which are registered with the Land Registration Authority (LRA), as in this case. The CA

ratiocinated that other than the registration of the assailed CLOAs, the RD already issued Original Certificate of Title No. OCL-
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474 in favor of respondents. Moreover, the CA relied on the PARADs finding that respondents were deprived of due process

when no notice of coverage was ever furnished and no just compensation was paid to them. The CA disposed of the case in this

wise:

WHEREFORE, premises considered, the petition is GRANTED. The assailed Decision dated May 3, 2005 and the Resolution

dated October 10, 2006 are hereby REVERSED and SET ASIDE. The Joint Decision of the Provincial Adjudicator dated

December 28, 2000 is hereby REINSTATED with MODIFICATION as follows:

"WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering the cancellation of the Certificate of Land Ownership Award (CLOA) NOS. 00155653, 00155652 and

00119810 issued to herein private respondents [petitioners in the instant case];

2. Ordering the Register of Deeds of Siniloan, Laguna to cause the cancellation of OCT No. OCL-474 to herein named

private respondents [petitioners in the instant case].

SO ORDERED."

SO ORDERED.11

Both parties filed their respective Motions for Reconsideration. The CA held, to wit:

Finding petitioners arguments meritorious, We PARTIALLY AMEND our previous decision in this case by ordering the Register

of Deeds of Siniloan, Laguna to cancel OCT No. OCL-475 and OCT No. OCL-395 and to issue new certificates of title deducting

the area of 47,187.50 square meters claimed by petitioner Dietmar L. Romualdez and 55,453.50 square meters claimed by

Spouses Daniel and Ana Romualdez and Jacqueline [L.] Romualdez, respectively.

WHEREFORE, premises considered, private respondents Motion for Reconsideration is hereby DENIED. Petitioners Motion

for Partial Reconsideration is hereby GRANTED. The Decision dated May 31, 2007 is hereby PARTIALLY AMENDED to read as

follows:

"WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering the cancellation of the Certificate of Land Ownership Award (CLOA) NOS. 00155653, 00155652 and

00119810 issued to herein private respondents.

2. Ordering the Register of Deeds of Siniloan, Laguna to cause the cancellation of OCT No. OCL-474 to herein named

private respondents.

3. Ordering the Register of Deeds of Siniloan, Laguna to cause the cancellation of OCT No. OCL-475 and to issue a new

one deducting the area of 47,187.50 square meters claimed by petitioner Dietmar L. Romualdez.

4. Ordering the Register of Deeds of Siniloan, Laguna to cause the cancellation of OCT No. OCL-395 and to issue a new

one deducting the area of 55,453.50 square meters claimed by petitioners Spouses Daniel and Ana Romualdez and

Jacqueline L. Romualdez.

SO ORDERED."

SO ORDERED.12

Hence, this Petition, assigning the following as errors:

I.
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The Honorable Court of Appeals has no basis in REVERSING the DECISION of the Department of Agrarian Reform

Adjudication Board in upholding the validity of Certificate of Land Ownership Award Nos. 00155653, 00155652 and

00119810 issued to herein petitioners; [and]

II.

The Honorable Court of Appeals erred in undermining [the] ISSUE OF JURISDICTION as this is cognizable by the

Regional Director and not by the PARAD and/or the DARAB.13

Petitioners Cesar Caguin, Cleofas Vitor, Teresita Vitor, Jose Levitico Dalay, Marcelo Dalay, Esperanza Mario, Celestina Cosico,

Ma. Ruth Pacurib, and Raquel San Juan, through the Legal Assistance Division of the DAR, claim that findings of fact of the

DARAB should have been respected by the CA; that the CLOAs covering the subject properties were registered in 1994 and 1995

but respondents only assailed the validity of the same in 2000; and that the said CLOAs are already incontestable and

indefeasible. Moreover, petitioners highlight the fact that the parties in this case are not partners to any tenancy venture.

Invoking this Courts ruling in Heirs of Julian dela Cruz v. Heirs of Alberto Cruz,14petitioners submit that the DAR Secretary has

jurisdiction in this case, not the DARAB.15

On the other hand, respondents prefatorily manifest that out of the 44 respondents before the CA, only 9 signed the petition filed

before this Court, and that petitioners counsel failed to indicate the full names of petitioners in the petition. Respondents argue

that the errors assigned by petitioners are matters not pertaining to questions of law but rather to the CAs factual findings.

Respondents rely on the CAs findings that their constitutional right to due process was violated because no notice of coverage

was sent to them and that they were deprived of payment of just compensation. Moreover, respondents claim that they are not

barred by prescription and petitioners cannot raise this issue for the first time on appeal; that they have been paying the real

property taxes and are actually in possession of the subject properties; and that documents, which petitioners failed to refute,

show that the said properties are private lands owned by respondents and their predecessors-in-interest. Respondents stress

that the action initially filed before the PARAD was not a protest considered as an Agrarian Law Implementation (ALI) case, but

for quieting and cancellation of title, reconveyance, and damages; that the 2003 DARAB Rules of Procedure clearly states that

the DARAB has jurisdiction to cancel CLOAs registered with the LRA; and that the assailed CLOAs were already registered with

the RD of Laguna.16

The petition is impressed with merit.

Verily, our ruling in Heirs of Julian dela Cruz v. Heirs of Alberto Cruz17is instructive:

The Court agrees with the petitioners contention that, under Section 2(f), Rule II of the DARAB Rules of Procedure, the DARAB

has jurisdiction over cases involving the issuance, correction and cancellation of CLOAs which were registered with the LRA.

However, for the DARAB to have jurisdiction in such cases, they must relate to an agrarian dispute between landowner and

tenants to whom CLOAs have been issued by the DAR Secretary. The cases involving the issuance, correction and cancellation of

the CLOAs by the DAR in the administrative implementation of agrarian reform laws, rules and regulations to parties who are

not agricultural tenants or lessees are within the jurisdiction of the DAR and not of the DARAB.18

It is established and uncontroverted that the parties herein do not have any tenancy relationship. In one case, this Court held

that even if the parties therein did not have tenancy relations, the DARAB still has jurisdiction. However, the said case must be

viewed with particularity because, based on the material allegations of the complaint therein, the incident involved the

implementation of the CARP, as it was founded on the question of who was the actual tenant and eventual beneficiary of the

subject land. Hence, this Court held therein that jurisdiction should remain with the DARAB and not with the regular courts.19

However, this case is different. Respondents complaint was bereft of any allegation of tenancy and/or any matter that would

place it within the ambit of DARABs jurisdiction.

While it is true that the PARAD and the DARAB lack jurisdiction in this case due to the absence of any tenancy relations between

the parties, lingering essential issues are yet to be resolved as to the alleged lack of notice of coverage to respondents as

landowners and their deprivation of just compensation. Let it be stressed that while these issues were discussed by the PARAD

in his decision, the latter was precisely bereft of any jurisdiction to rule particularly in the absence of any notice of coverage for
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being an ALI case.20Let it also be stressed that these issues were not met head-on by petitioners. At this juncture, the issues

should not be left hanging at the expense and to the prejudice of respondents.

However, this Court refuses to rule on the validity of the CARP coverage of the subject properties and the issuance of the assailed

CLOAs. The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which jurisdiction was

initially lodged with an administrative body of special competence.21The doctrine of primary jurisdiction does not allow a court

to arrogate unto itself authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative

body of special competence.22The Office of the DAR Secretary is in a better position to resolve the particular issue of non-

issuance of a notice of coverage an ALI case being primarily the agency possessing the necessary expertise on thematter.23The power to determine such issue lies with the DAR, not with this Court.

A final note.

It must be borne in mind that this Court is not merely a Court of law but of equity as well.1avvphilJustice dictates that the DAR

Secretary must determine with deliberate dispatch whether indeed no notice of coverage was furnished to respondents and

payment of just compensation was unduly withheld from them despite the fact that the assailed CLOAs were already registered,

on the premise that respondents were unaware of the CARP coverage of their properties; hence, their right to protest the same

under the law was defeated. Respondents right to due process must be equally respected. Apropos is our ruling in Heir of

Nicolas Jugalbot v. Court of Appeals:24

[I]t may not be amiss to stress that laws which have for their object the preservation and maintenance of social justice are not

only meant to favor the poor and underprivileged. They apply with equal force to those who, notwithstanding their more

comfortable position in life, are equally deserving of protection from the courts. Social justice is not a license to trample on the

rights of the rich in the guise of defending the poor, where no act of injustice or abuse is being committed against them.

As the court of last resort, our bounden duty to protect the less privileged should not be carried out to such an extent as to deny

justice to landowners whenever truth and justice happen to be on their side. For in the eyes of the Constitution and the statutes,

EQUAL JUSTICE UNDER THE LAW remains the bedrock principle by which our Republic abides.

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated May 31, 2007 and Amended Decision (Partial)

dated September 25, 2007 of the Court of Appeals in CA-G.R. SP No. 97768 are herebyREVERSED and SET ASIDE. The case

is DISMISSED for lack of jurisdiction of the Department of Agrarian Reform Adjudication Board. This decision is without

prejudice to the rights of respondents Johanna L. Romualdez, Dietmar L. Romualdez, Jacqueline L. Romualdez, and Spouses

Daniel and Ana Romualdez to seek recourse from the Office of the Department of Agrarian Reform Secretary. No costs.

NESTLE PHILIPPINES, INC.vs. UNIWIDE SALES, INC G.R. No. 174674 October 20, 2010

The Case

This is a petition for review1of the 10 January 2006 Decision2and the 13 September 2006 Resolution3of the Court of Appeals in

CA-G.R. SP No. 82184. The 10 January 2006 Decision denied for lack of merit the petition for review filed by petitioners. The 13

September 2006 Resolution denied petitioners' motion for reconsideration and referred to the Securities and Exchange

Commission petitioners' supplemental motion for reconsideration.

The Facts

The petitioners in this case are Nestle Philippines, Inc. and Nestle Waters Philippines, Inc., formerly Hidden Springs & Perrier

Inc. The respondents are Uniwide Sales, Inc., Uniwide Holdings, Inc., Naic Resources and Development Corporation, Uniwide

Sales Realty and Resources Club, Inc., First Paragon Corporation, and Uniwide Sales Warehouse Club, Inc.

On 25 June 1999, respondents filed in the Securities and Exchange Commission (SEC) a petition for declaration of suspension of

payment, formation and appointment of rehabilitation receiver, and approval of rehabilitation plan. The petition was docketed

as SEC Case No. 06-99-6340.4The SEC approved the petition on 29 June 1999.
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On 18 October 1999, the newly appointed Interim Receivership Committee filed a rehabilitation plan in the SEC. The plan was

anchored on return to core business of retailing; debt reduction via cash settlement and dacion en pago; loan restructuring;

waiver of penalties and charges; freezing of interest payments; and restructuring of credit of suppliers, contractors, and private

lenders.

On 14 February 2000, the Interim Receivership Committee filed in the SEC an Amended Rehabilitation Plan (ARP). The ARP

took into account the planned entry of Casino Guichard Perrachon, envisioned to infuse P3.57 billion in fresh capital. On 11 April

2001, the SEC approved the ARP.

On 11 October 2001, the Interim Receivership Committee filed in the SEC a Second Amendment to the Rehabilitation Plan

(SARP) in view of Casino Guichard Perrachon's withdrawal. In its Order dated 23 December 2002, the SEC approved the SARP.

Petitioners, as unsecured creditors of respondents, appealed to the SEC praying that the 23 December 2002 Order approving the

SARP be set aside and a new one be issued directing the Interim Receivership Committee, in consultation with all the unsecured

creditors, to improve the terms and conditions of the SARP.

The Ruling of the SEC

In its 13 January 2004 Order, the SEC denied petitioners' appeal for lack of merit. Petitioners then filed in the Court of Appeals a

petition for review of the 13 January 2004 Order of the SEC.

The Ruling of the Court of Appeals

In its assailed 10 January 2006 Decision, the Court of Appeals denied for lack of merit the petition for review filed by petitioners,

thus:

In reviewing administrative decisions, the findings of fact made therein must be respected as long as they are supported by

substantial evidence, even if not overwhelming or preponderant; that it is not for the reviewing court to weigh the conflicting

evidence, determine the credibility of the witnesses, or otherwise substitute its own judgment for that of the administrative

agency on the sufficiency of the evidence; that the administrative decision in matters within the executive jurisdiction can only

be set aside on proof of grave abuse of discretion, fraud, or error of law.

WHEREFORE, the petition for review is DENIED for lack of merit.

SO ORDERED.5

Petitioners moved for reconsideration. They also filed a supplemental motion for reconsideration alleging that they received a

letter on 25 January 2006, from the president of the Uniwide Sales Group of Companies, informing them of the decision to

transfer, by way of full concession, the operation of respondents' supermarkets to Suy Sing Commercial Corporation starting 1

March 2006.

In its questioned 13 September 2006 Resolution, the Court of Appeals denied for lack of merit petitioners' motion for

reconsideration and referred to the SEC petitioners' supplemental motion for reconsideration.

Dissatisfied, petitioners filed in this Court on 3 November 2006 the present petition for review.

The Issue

Before us, petitioners raise the issue of whether the SARP should be revoked and the rehabilitation proceedings

terminated.1avvphi1

The Court's Ruling

The petition lacks merit.
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Petitioners contend that the transfer of respondents' supermarket operations to Suy Sing Commercial Corporation has made the

SARP incapable of implementation. Petitioners point out that since the SARP may no longer be implemented, the rehabilitation

case should be terminated pursuant to Section 4-26, Rule IV of the SEC Rules of Procedure on Corporate Recovery. Petitioners

claim that the terms and conditions of the SARP are unreasonable, biased in favor of respondents, prejudicial to the interests of

petitioners, and incapable of a determination of feasibility.

Respondents maintain that the SARP is feasible and that the SEC Hearing Panel did not violate any rule or law in approving it.

Respondents stress that the lack of majority objection to the SARP bolsters the SEC's findings that the SARP is feasible.

Respondents insist that the terms and conditions of the SARP are in accord with the Constitution and the law.

The Court takes judicial notice of the fact that from the time of the filing in this Court of the instant petition, supervening events

have unfolded substantially changing the factual backdrop of this rehabilitation case.

As found by the SEC, several factors prevented the realization of the desired goals of the SARP, to wit: (1) unexpected refusal of

some creditors to comply with all the terms of the SARP; (2) unexpected closure of Uniwide EDSA due to the renovation of

EDSA Central Mall; (3) closure of Uniwide Cabuyao and Uniwide Baclaran; (4) lack of supplier support for supermarket

operations; and (5) increased expenses.6

On 11 July 2007, the rehabilitation receiver filed in the SEC a Third Amendment to the Rehabilitation Plan (TARP). But before

the SEC could act on the TARP, the rehabilitation receiver filed on 29 September 2008 a Revised Third Amendment to the

Rehabilitation Plan (revised TARP).

A majority of the secured creditors strongly opposed the revised TARP, which focused on the immediate settlement of all the

obligations accruing to the unsecured creditors through a dacion of part of respondents' Metro Mall property.7Since some

creditors claimed that the value of the Metro Mall property had gone down since 1999, the Hearing Panel issued its 30 July 2009

Order directing the reappraisal of the Metro Mall property.8

In its 17 September 2009 Order, the Hearing Panel directed respondents to show cause why the rehabilitation case should not be

terminated considering that the rehabilitation plan had undergone several revisions. The Hearing Panel also directed the

creditors to manifest whether they still wanted the rehabilitation proceedings to continue.

Respondents moved for reconsideration of the 30 July 2009 and the 17 September 2009 Orders. The Hearing Panel, in its 6

November 2009 Order, denied the motion for reconsideration for being a prohibited pleading.

Respondents then filed in the SEC a petition for certiorari assailing the 30 July 2009, the 17 September 2009, and the 6

November 2009 Orders of the Hearing Panel. The petition was docketed as SECEn Banc Case No. 12-09-183.

Meanwhile, in its 13 January 2010 Resolution, the Hearing Panel disapproved the revised TARP and terminated the

rehabilitation case as a consequence. The dispositive portion of the Resolution reads:

WHEREFORE, premises considered:

1. Petitioners' Motion to Approve Revised Third Amendment to the Group Rehabilitation Plan (Revised TARP) is

DENIED.

2. The motions to declare petitioners' rehabilitation plan "not feasible" are GRANTED. Consequently, the instantrehabilitation case is TERMINATED and the stay order is lifted and dissolved. This case is deemed finally disposed of

pursuant to Section 5.2 of Republic Act No. 8799.9

On 22 January 2010, respondents filed another petition appealing the Hearing Panel's 13 January 2010 Resolution. The petition

was docketed as SECEn Banc Case No. 01-10-193. In order to preserve the parties' rights during the pendency of the appeal, the

SEC en banc in its Order dated 18 March 2010 directed the parties to observe the status quo prevailing before the issuance of the

13 January 2010 Resolution of the Hearing Panel.
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Meanwhile, on 27 April 2010, the SEC en banc issued an Order directing the rehabilitation receiver, Atty. Julio C. Elamparo, to

submit a comprehensive report on the progress of the implementation of the SARP.

Finally, in its 30 September 2010 Order, the SEC consolidated SECEn Banc Case No. 01-10-193 with SECEn Banc Case No. 12-

09-183, the parties being identical and the issues in both petitions being in reference to the same rehabilitation case.

Considering the pendency of SECEn Banc Case No. 12-09-183 and SECEn Banc Case No. 01-10-193, recently filed in the SEC,

involving the very same rehabilitation case subject of this petition, the present petition has been rendered premature.

SECEn Banc Case No. 12-09-183 deals with the Order of the Hearing Panel directing respondents to show cause why the

rehabilitation case should not be terminated and the creditors to manifest whether they still want the rehabilitation proceedings

to continue. On the other hand, SECEn Banc Case No. 01-10-193 is an appeal of the Hearing Panel's Resolution disapproving

the revised TARP and terminating the rehabilitation proceedings.

In light of supervening events that have emerged from the time the SEC approved the SARP on 23 December 2002 and from the

time the present petition was filed on 3 November 2006, any determination by this Court as to whether the SARP should be

revoked and the rehabilitation proceedings terminated, would be premature.

Undeniably, supervening events have substantially changed the factual backdrop of this case. The Court thus defers to the

competence and expertise of the SEC to determine whether, given the supervening events in this case, the SARP is no longer

capable of implementation and whether the rehabilitation case should be terminated as a consequence.

Under the doctrine of primary administrative jurisdiction, courts will not determine a controversy where the issues for

resolution demand the exercise of sound administrative discretion requiring the special knowledge, experience, and services of

the administrative tribunal to determine technical and intricate matters of fact.10

In other words, if a case is such that its determination requires the expertise, specialized training, and knowledge of an

administrative body, relief must first be obtained in an administrative proceeding before resort to the court is had even if the

matter may well be within the latter's proper jurisdiction.11

The objective of the doctrine of primary jurisdiction is to guide the court in determining whether it should refrain from

exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question

arising in the proceeding before the court.12

It is not for this Court to intrude, at this stage of the rehabilitation proceedings, into the primary administrative jurisdiction of

the SEC on a matter requiring its technical expertise. Pending a decision of the SEC on SECEn Banc Case No. 12-09-183 and

SECEn Banc Case No. 01-10-193, which both seek to resolve the issue of whether the rehabilitation proceedings in this case

should be terminated, we are constrained to dismiss this petition for prematurity.

WHEREFORE, we DISMISS the instant petition for having been rendered premature pending a decision of the Securities and

Exchange Commission (SEC) in SECEn Banc Case No. 12-09-183 and SECEn Banc Case No. 01-10-193.

GOVERNMENT SERVICE INSURANCE SYSTEMvs. COMMISSION ON AUDIT G.R. No. 138381 April 16, 2002

At the core of these two consolidated petitions is the determination of whether the Commission on Audit (COA) properly

disallowed on post-audit, certain allowances and/or fringe benefits granted to employees of the Government Service Insurance

System (GSIS), after the effectivity of Republic Act No. 6758, otherwise known as the Salary Standardization Law on July 1,

1989.

I. G.R. No. 138381
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In this special civil action for certiorari under Rule 65 in relation to Rule 64 of the 1997 Rules of Civil Procedure, petitioner GSIS

seeks the annulment of COA Decision No. 98-337 dated August 25, 1998, which affirmed the Resident Auditor's disallowance of

monetary benefits granted to or paid by GSIS in behalf of its employees.

After the effectivity of R.A. No. 6758 on July 1, 1989, petitioner GSIS increasedthe following benefits of its personnel: a)

longevity pay; b) children's allowance; c) housing allowance for its branch and assistant branch managers; and d) employer's

share in the GSIS Provident Fund from 20% to 45% of basic salary for incumbent employees as of June 30, 1989.

The GSIS also remittedemployer's share to the GSIS Provident Fund for new employees hired after June 30, 1989, continuedthepayment of premiums for group personnel accident insurance and grantedloyalty cash award to its employees in addition to a

service cash award.

Upon post-audit and examination, the GSIS Corporate Auditor disallowed the aforementioned allowances and benefits, citing

Section 12 of R.A. No. 6758 in relation to sub-paragraphs 5.4 and 5.5 of its implementing rules, DBM Corporate Compensation

Circular No. 10 (CCC No. 10). The first paragraph of Section 12, R.A. No. 6758 reads:

SEC. 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. x x x

Sub-paragraphs 5.4 and 5.5 of CCC No. 10,1meanwhile, supplemented Section 12 above by enumerating the additional

compensation authorized to be continued for incumbent employees as of July 1, 1989.

According to the Corporate Auditor, R.A. No. 6758 authorized the continued grant of allowances/fringe benefits not integrated

into the standardized salary for incumbents as of June 30, 1989. However, these non-integrated benefits may not be increased

after effectivity of the statute, without prior approval of the DBM or Office of the President or in the absence of legislative

authorization in accordance with CCC No. 10. Explaining this position, the Corporate Auditor invoked COA Memorandum No.

90-653 dated June 4, 1990, which states:

x x x While it is true that R.A. 6758 and Corporate Compensation Circular (CCC) No. 10 are silent with respect to theincrease of allowances/fringe benefits not integrated into the basic salary and allowed to be continued only for

incumbents as of June 30, 1989, it would be inconsistent to allow further increase in said allowances and fringe benefits

after July 1, 1989 since continuance thereof for incumbents is merely being tolerated until they vacate their present

positions for which they have been authorized to receive allowances/fringe benefits.2

The Corporate Auditor also did not allow in audit the remittance of employer's share to the GSIS Provident Fund for new-hires

because the continuation of said benefit was only in favor of incumbents, as explicitly stated in the law. The payment of group

insurance premiums covering all employees was likewise disallowed, for the reason that under sub-paragraph 5.6 of CCC No.

10,3all fringe benefits granted on top of basic salary not otherwise enumerated under sub-paragraphs 5.4 and 5.5 thereof were

already discontinued effective November 1, 1989. As for the loyalty cash award and the service cash award, the Corporate

Auditor opined that only one of the two monetary incentives may be availed of by GSIS personnel.

On February 26, 1993, Mr. Julio Navarrete, Vice-President of the GSIS Human Resources Group, wrote to respondent COA

appealing, in behalf of GSIS, the afore-stated disallowances by the Corporate Auditor. Mr. Navarrete averred that although it

may be conceded that the Salary Standardization Law did not extend the subject benefits to new-hires after the law's effectivity,

the increase thereof should nonetheless be allowed for incumbents since these benefits have been enjoyed by said employees

even prior to the passage of said law.4

In the case ofPhilippine Ports Authority v. Commission on Audit,5which involved a similar increase, after the enactment of R.A.

No. 6758, in the representation and transportation allowance (RATA) of Philippine Ports Authority (PPA) employees, it was held

that:
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x x x the date July 1, 1989 does not serve as a cut-off date with respect to the amount of RATA. The date July 1, 1989

becomes crucial only to determine that as of said date, the officer was an incumbentand wasreceiving the RATA, for

purposes of entitling him to its continued grant. This given date should not be interpreted as fixing the maximum

amount of RATA to be received by the official.6

It was further alleged that contrary to the Corporate Auditor's contention, the GSIS Board of Trustees retained its power to fix

and determine the compensation package for GSIS employees despite the passage of the Salary Standardization Law, pursuant

to Section 36 of Presidential Decree No. 1146, as amended by Presidential Decree No. 1981, to wit:

Sec. 36. x x x

The Board of Trustees has the following powers and functions, among others:

x x x x x x x x x

(d) Upon the recommendation of the President and General Manager, to approve the System's organizational and

administrative structure and staffing pattern, and "to establish, fix, review, revise and adjust the appropriate

compensation package for the officers and employees of the System, with reasonable allowances, incentives, bonuses,

privileges and other benefits as may be necessary or proper for the effective management, operation and

administration of the System." For the purpose of this and the preceding subsection, the System shall be exempt from

the rules and requirements of the Office of the Budget and Management and the Office of the Compensation andPosition Classification;

x x x x x x x x x

Pursuant thereto, the GSIS Board of Trustees may validly increase and grant the subject benefits, even without securing

the imprimatur of the DBM, Office of the President or Congress.

On August 25, 1998, the COA affirmed the disallowances made by the Corporate Auditor and held that Section 36 of P.D. No.

1146, as amended, was already repealed by Section 16 of R.A. No. 6758.7The COA similarly concluded that the GSIS Board of

Trustees may not unilaterally augment or grant benefits to its personnel, without the necessary authorization required under

CCC No. 10.8

GSIS filed a motion for reconsideration of the COA decision, invoking the ruling inDe Jesus, et al. v. COA and

Jamoralin.9Corporate Compensation Circular No. 10 (CCC No. 10) was declared to be of no legal force or effect due to its non-

publication in the Official Gazette or a newspaper of general circulation. In view of this development, GSIS posited that the

questioned disallowances no longer had any leg to stand on and that COA should consequently lift the disallowances premised

on CCC No. 10.

On March 23, 1999, the COA denied the motion for reconsideration stating:

Although CCC No. 10 has been declared ineffective due to its non-publication as provided for in Article 2 of the Civil

Code of the Philippines, the disallowances on the increased rates of the allowances/fringe benefits can still be sustained

because as ruled earlier, the power of the governing boards of corporations to fix compensation and allowances of

personnel, including the authority to increase the rates, pursuant to their specific charters had already been repealed by

Sec. 3 of P.D. 1597 and Section 16 of R.A. 6758. The other reasons or grounds relied upon by the petitioner upon whichthe Motion is predicated have already been judiciously passed upon by this Commission when it rendered the subject

COA Decision No. 98-337.

Accordingly, there being no new, sufficient and material evidence adduced as would warrant a reversal or modification

of the decision herein sought to be reconsidered, this Commission denies with finality the instant motion for

reconsideration for utter lack of merit.10

Hence, this petition, challenging the above decision and resolution of the COA on the following grounds:


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A.)RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF

JURISDICTION IN HOLDING THAT THE POWER SPECIFICALLY GRANTED BY PRESIDENTIAL DECREE NO.

1146, AS AMENDED, TO THE GSIS BOARD OF TRUSTEES, TO ESTABLISH AND FIX THE APPROPRIATE

COMPENSATION PACKAGE FOR GSIS OFFICERS AND EMPLOYEES HAS ALREADY BEEN REPEALED BY

REPUBLIC ACT NO. 6758.

B.)RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF

JURISDICTION IN DENYING PETITONER'S MOTION FOR RECONSIDERATION DESPITE THE DECLARATION BY

THIS HONORABLE COURT IN THE CASE OFRODOLFO S. DE JESUS et al. vs. COMMISSION ON AUDIT andLEONARDO L. JAMORALIN, THAT CCC NO. 10 - THE MAIN BASIS OF THE QUESTIONED DISALLOWANCE - IS

INVALID AND INEFFECTIVE FOR LACK OF THE REQUIRED PUBLICATION.11

II. G.R. No. 141625

This petition for review on certiorari under Rule 45 of the Rules of Court was precipitated by the factual antecedents of G.R. No.

138381. While GSIS was appealing the disallowances made by the Corporate Auditor above, some of its employees retired and

submitted the requisite papers for the processing of their retirement benefits. Since the retired employees received allowances

and benefits which had been disallowed by the Corporate Auditor, GSIS required them to execute deeds of consent that would

authorize GSIS to deduct from their retirement benefits the previously paid allowances, in case these were finally adjudged to be

improper. Some of the retired employees agreed to sign the deed, while others did not. Nonetheless, GSIS went ahead with the

deductions.

On April 16, 1998, a number of these retired GSIS employees12(hereafter referred to as "retirees") brought Case No. 001-98

before the GSIS Board of Trustees (hereafter referred to as "GSIS Board") questioning the legality of the deductions. They

claimed that COA disallowances can not be deducted from retirement benefits, considering that these were explicitly exempted

from such deductions under the last paragraph of Section 39, Republic Act No. 8291, which states:

SEC. 39.Exemption from Tax, Legal Process and Lien. - x x x

x x x x x x x x x

The funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to the benefits

under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by the courts,

quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and from allfinancial obligations of the members, including his pecuniary accountability arising from or caused or occasioned by his

exercise or performance of his official functions or duties, or incurred relative to or in connection with his position or

workexcept when his monetary liability, contractual or otherwise, is in favor of the GSIS.

The GSIS Board subsequently referred the case for hearing to its Corporate Secretary, Atty. Alicia Albert. Thereafter, the retirees

and GSIS, through its Legal Services Group (LSG), entered into a stipulation of facts and agreed on a focal issue, namely:

whether the COA disallowances may be legally deducted from the retirement benefits, on the premise that the same

are monetary liabilities of the retirees in favor of GSISunder Section 39 above. GSIS also insisted that since the deductions

were anchored on the disallowances made by the COA, the retirees' remedy was to ventilate the issue before said Commission

and not the GSIS Board.

Meanwhile, theDe Jesus case mentioned in G.R. No. 138381 was promulgated, rendering CCC No. 10 legally ineffective. This

prompted the hearing officer to suggest that the parties enter into an agreement as to what allowances and benefits are covered

by CCC No. 10, so that a partial decision can be rendered thereon. The retirees thus filed a motion for partial decision,

submitting that there no longer existed any obstacle to the increase in allowances and benefits covered by CCC No. 10. These

allegedly include: a) GSIS management's share in the Provident Fund; b) initial payment of the productivity bonus; c)

acceleration implementation of the new salary schedule effective August 1, 1995; d) increase in clothing allowance, rice

allowance, meal subsidy, children's allowance and longevity pay; e) loyalty award; f) 1995 mid-year financial assistance; and g)

other allowances as may be suggested by the Vice-President of the GSIS Human Resources Group.13
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On November 25, 1998, GSIS filed an opposition to the retiree's motion for partial decision,14asserting thatDe Jesus had no

bearing on the principal issue which, as agreed upon, was the interpretation of Section 39 of RA No. 8291. GSIS also filed on

even date, a motion to dismiss,15alleging that the nullity of CCC No. 10 rendered the petition moot and academic and paved the

way for the payment of the controverted allowances earlier deducted from the retirement benefits.

Replying to the two pleadings filed by GSIS, the retirees countered that a motion to dismiss was a prohibited pleading under

Section 14.13, Rule XIV of the GSIS Implementing Rules and Regulations.16Moreover, the retirees maintained that a motion to

dismiss may be filed in proceedings before the GSIS Board only prior to the filing of an answer which GSIS had already done.

Also, the LSG had previously agreed to a partial decision based on theDe Jesus case; it could thus no longer take a contradictorystand by opposing the retiree's motion for partial decision.17

On January 14, 1999, the retirees filed a motion for summary judgment18claiming that there were no factual issues involved and

that the question raised in the petition was purely legal in nature. The matter was directly submitted to the GSIS Board for its

consideration and resolution.

On March 3, 1999, the GSIS Board issued Resolution No. 72,19dismissing the petition. A motion for reconsideration filed by the

retirees was also denied by the Board in its Resolution No. 16120dated May 18, 1999.

The matter was then elevated to the Court of Appeals, which rendered a decision on September 30, 1999, disposing as follows:

IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. Resolution No. 72, Annex "A" of the Petitionand Resolution No. 161 Annex "C" of the Petition are hereby SET ASIDE and NULLIFIED. The Hearing Officer of the

Board of Trustees of the Respondent is directed to proceed, with dispatch, with the proceedings of Case No. 001-98, as

provided for in the Rules and regulations implementing Republic Act 8291 (IRR).

SO ORDERED.21

The appellate court held that the motion to dismiss filed by the LSG before the GSIS Board is a prohibited pleading under

applicable GSIS rules. The GSIS also had jurisdiction over the retirees' petition, as it pertained to the interpretation and

application of Section 39 of R.A. No. 8291, a law exclusively administered by the GSIS Board. Contrary to the LSG's submissions,

the Court of Appeals ruled that there was no identity in subject matter between the retiree's petition and the appeal from the

auditor's disallowances filed by GSIS with the COA. Thus, the GSIS Board may take cognizance of the retirees' petition

independently from the COA proceedings.

Hence, this second petition, assigning the following as errors:

I

THE COURT OF APPEALS ERRED IN RULING THAT THE BOARD OF TRUSTEES OF GSIS HAS JURISDICTION OVER THE

CASE.

II

THE COURT OF APPEALS ERRED IN RULING THAT THE CASE PENDING BEFORE THE SUPREME COURT IS DIFFERENT

FROM THE PRESENT CASE.22

On August 20, 2001, the two petitions were consolidated.

During the pendency of these petitions, GSIS Board Resolution No. 79,23which authorized the Provident Fund rate increase for

incumbent employees, was approved retroactively from March 1, 1994 by then President Joseph Estrada.24Thus, there no longer

appears to be any basis for disallowing the rate increase in management contribution to the Provident Fund from 20% to 45% of

the basic salary received by petitioner's incumbent employees. The presidential approval cured the lack of authorization cited by

respondent COA for disallowing this particular increase in benefit.
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We now proceed to the resolution of the twin petitions.

Petitioner GSIS insists that the GSIS Board retained its power to increase the subject benefits under Section 36 of P.D. 1146, as

amended (or the Revised GSIS Charter), despite the passage of R.A. No. 6758, particularly Section 16 thereof. The latter, which is

a general law, can not repeal or take precedence over the former because the Revised GSIS Charter is a special law that

specifically exempts GSIS from Office of the Compensation and Position Classification coverage.

We need not delve lengthily into this submission as this was earlier laid to rest by the Court inPhilippine International Trading

Corporation (PITC) v. COA,25where we held that "the repeal by Section 16 of RA 6758 of 'all corporate charters that exemptagencies from the coverage of the system' was clear and expressednecessarily to achieve the purposes for which the law was

enacted, that is, the standardization of salaries of all employees in government owned and/or controlled corporations to achieve

'equal pay for substantially equal work'."26As things now stand, GSIS is already exempt from salary standardization by express

provision of R.A. 829127 a subsequent enactment approved on May 30, 1997 which amended the Revised GSIS Charter. But

since GSIS was still governed by the latter at the time the increase in benefits were disallowed in audit, GSIS was then yet

covered by the Salary Standardization Law, thereby making our ruling in PITC presently relevant and applicable.

We now come to the legal propriety of the COA disallowances.

For purposes of clarity, a distinction must initially be made between those allowances which are deemed consolidated into the

standardized salary and those which are not under the terms of R.A. No. 6758. As correctly pointed out by petitioner GSIS,

the housing allowance, longevity pay and children's allowance are non-integratedbenefits, expressly made so by sub-

paragraphs 5.4 and 5.5 of CCC No. 10 in relation to the last sentence of Section 12 (par. 1), R.A. No. 6758. On the other hand,

thepayment of group personnel accident insurance premiums, loyalty cash award and service cash awardare not excluded

from the standardized salary by the same provisions of CCC No. 10 or R.A. No. 6758. These latter allowances are thus

considered integratedinto the basic salary and are treated differently under the same law.

A. NON-INTEGRATED BENEFITS AND ALLOWANCES

a. Longevity Pay and Children's Allowance

As regards the increase in longevity pay and children's allowance, we find applicable our pronouncement inPhilippine Ports

Authority (PPA) v. COA.28This case involved an adjustment in the representation and transportation allowance (RATA) of

incumbent PPA employees after the effectivity of R.A. No. 6758 on July 1, 1989. The RATA therein is similar to the longevity pay

and children's allowance subject of the instant petition, in the sense that: a) it is also a non-integrated allowance authorized to becontinued for incumbents under Section 12, R.A. No. 6758; and b) the rate thereof did not consist of a definite amount but was

subject to certain factors and/or stipulations that were nonetheless fixed before R.A. 6758 took effect.

In thePPA case, the adjustment was brought about by a corresponding increase in the employees' basic salary upon which the

40% RATA was based. Respondent Commission disallowed the payment of RATA differentials arguing, as in this petition, that

the RATA should be fixed at the prevailing rate prior to July 1, 1989, regardless of the increase in basic salary. It was postulated

therein that consistent with the second sentence of said Section 12 (par. 1), the RATA should no longer be based on 40% of basic

standardized salary but on the highest amount of RATA received by the incumbent as of July 1, 1989.

We rejected respondent COA's interpretation of Section 12 and held that the date July 1, 1989 should not be construed as a cut-

off date for setting the amount of allowances authorized to be continued under said provision. The date July 1, 1989 is important

only for determining whether an employee is an incumbent and receiving the allowance prior to the law's effectivity in order to

ascertain if such employee is qualified to its continued grant. It is not, however, to be interpreted as fixing the maximum amount

of allowance that an incumbent employee is authorized to receive, but is only a qualifying date imposed by the statute.

Accordingly, the specific amount of longevity pay and children's allowance being received by an incumbent GSIS employee as of

July 1, 1989 is not to be considered as the highest amount authorized under the law.

It is thus evident that in adjusting the amount of allowances mentioned above, petitioner GSIS was merely complying with the

policy of non-diminution of pay and benefits enunciated in R.A. No. 6758.29This policy does not only pertain specifically to the

amount being received by the incumbent as of July 1, 1989, but also to the terms and conditions attached to these benefits prior


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to the passage of the statute. Relative to this, it should be noted that respondent COA did not dispute the fact that these benefits,

including the terms and conditions thereof, are part of a compensation package granted by the GSIS Board to incumbents even

before R.A. 6758 took effect. In turn, this compensation package was incorporated in the 1978 GSIS Revised Compensation

System approved by the President, upon recommendation of the Department of Budget and Management (DBM).

Thus, to peg the amount of these non-integrated allowances at the figure being received by the incumbent as of July 1, 1989

would vary the terms of the benefits to which the incumbents are entitled. This could not have been the intendment of the

statute, because such interpretation would effectively impair the incumbents' rights to these allowances, which have already

accrued prior to July 1, 1989. In other words, before R.A. No. 6758 was enacted, incumbent GSIS employees had a fixed right tothese allowances under the terms and conditions then obtaining.30They could not therefore be excluded from its enjoyment

under the same terms and conditions without violating basic precepts of fairness and due process.

b.Housing Allowance

In contrast to the two preceding non-integrated benefits, it appears that the housing allowance given to petitioner's incumbent

branch and assistant branch managers before the passage of R.A. No. 6758 consisted of a fixed amount of P500.00 and P300.00

respectively. Said amounts were subsequently increased to P2,000.00 and P3,000.00 by virtue of GSIS Board Resolution No.

29431dated July 26, 1991.

As stated earlier, the power of the GSIS Board to "establish, fix, review, revise and adjust" the allowances, privileges and other

benefits of its employees under Section 36 of the Revised GSIS Charter has been repealed by R.A. No. 6758.32As a consequence,

the GSIS Board may no longer grant any increase in housing allowance on its own volition after June 30, 1989.

Further, unlike the two preceding non-integrated benefits, it cannot be said that the affected branch and assistant branch

managers acquired a vested right to any amount of housing allowance in excess of that granted to them before the passage of

R.A. No. 6758. They could not have been entitled to any amount other than that which was already determined before the law

took effect, because the terms of this allowance did not admit of any adjustment. Otherwise stated, since the amount of said

housing allowance was fixed, the disallowance by the COA of increases therein would not result in any diminution of benefits for

these incumbent managers. Neither can the GSIS Board unilaterally grant said increases by board resolution because it no longer

had any power to do so when it issued Resolution No. 294.

It appears that respondent COA did not totally disallow the increase in housing allowance, but merely approved a lesser amount.

Respondent COA allowed a 100% increase of P1,000.00 and P600.00 respectively, in accordance with the amount authorized by

the DBM.33In fact, the DBM permitted the increase in express recognition of the fact that this has been the practice in GSISbefore the advent of R.A. No. 6758. Consequently, it is only to the extent of the approved amount that the housing allowance

should be allowed in audit.

B. INTEGRATED BENEFITS AND ALLOWANCES

a. Group Personnel Accident Insurance Premiums

As stated earlier, the payment of premiums for group personnel accident insurance in favor of incumbent GSIS employees was

not listed as an exception to the standardized salary under Section 12, R.A. No. 6758 and sub-paragraphs 5.4 and 5.5 of CCC No.

10. As such, it is considered as a fringe benefit granted on top of basic salary which, according to sub-paragraph 5.6 of CCC No.

10, must be discontinued as of November 1, 1989.

However, as pointed out by petitioner GSIS, CCC No. 10 was declared to be of no legal force and effect inDe Jesus v. COA.34It

can not thus be utilized as a justification for depriving incumbent employees of integrated benefits which they were receiving

prior to R.A. No. 6758. As held inDe Jesus:

x x x it is decisively clear that DBM CCC No. 10, which completely disallows payment of allowances and other additional

compensation to government officials and employees, starting November 1, 1989, is not a mere interpretative and

internal regulation. It is something more than that. And why not, when it tends to deprive government workers of their

allowances and additional compensation sorely needed to keep body and soul together. At the very least, before said

circular under attack may be permitted to substantially reduce their income, the government officials and employees


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concerned should be apprised and alerted by the publication of subject circular in the Official Gazette or in a newspaper

of general circulation in the Philippines-to the end that they may be given amplest opportunity to voice out whatever

opposition they may have, and to ventilate their stance on the matter. This approach is more in keeping with

democratic precepts and rudiments of fairness and transparency.35

Conformably, since the disallowance of the premium payments was founded upon CCC No. 10, the consequent outcome of the

latter's nullification is to remove any obstacle to the aforesaid benefit.

The subsequent publication of CCC No. 10 in the Official Gazette on March 1, 1999,36neither cured the defect nor retroact to thetime that the aforesaid items were disallowed in audit. Again, inPITC v. COA,37we ruled that from the time the COA disallowed

the benefit up to the filing of the instant petition, CCC No. 10 remained in legal limbo due to its lack of publication. And because

publication is a condition precedentto the effectivity of CCC No. 10, it must first be complied with before affecting individual

rights; otherwise, "such omission would offend due process insofar as it would deny the public, knowledge of the laws that are

supposed to govern it."38

b.Loyalty and Service Cash Award

We have carefully examined the records of the case and find that the disallowance of the simultaneous grant of these two

integrated benefits was not so much founded on CCC No. 10, but upon a ruling made by the Civil Service Commission (CSC).

Notably, with respect to the loyalty and service cash award, respondent COA held:

As regards the payment of loyalty cash award under Sec. 7 (e), Rule X, of the CSC Omnibus rules Implementing Book V

of E.O. No. 292 and service cash award, this Commission holds that only one can be availed of by GSIS employees in the

light of the clear ruling of the Civil Service Commission embodied in a letter dated May 12, 1993 that since both benefits

have the same rationale, which is to reward long and dedicated service, "availment of the award can be made only under

either system, whichever is more advantageous to the employees."39

The foregoing conclusion was apparently based on the position taken by Corporate Auditor Fe R. Munoz, who expounded

thereon in a second indorsement40dated December 14, 1993 as follows:

Service Cash Award is an incentive granted exclusively to any officer or employee of the GSIS who has rendered at least

fifteen (15) years continuous and dedicated service to the GSIS. It entitles them to receive amounts ranging from

P500.00 to P15,000.00 according to the number of years of service, pursuant to the provisions of the Collective

Bargaining Agreement (CBA), which payments are deducted by this Office from payment of Loyalty (Cash) Award. Onthe other hand, this should not be confused with the amount of Loyalty (Cash) Award in graduated amounts of

P1,200.00, P1,300.00, P1,400.00 and P1,500.00 for every year of service of GSIS executives and employees who have

completed at least ten (10) years of continuous service as authorized under Board Resolution No. 333 dated October 29,

1992 (Annex 7), using as legal basis Section 7 (e), Rule X of the Omnibus Civil Service Law and Rules, Implementing

Book V of Executive Order No. 292, providing for the cash bonus of not less than One Hundred Pesos (P100.00) per

year of service, chargeable against Agency's savings. It seems that the foregoing provision allows for a minimum but not

for a maximum amount to be given, thereby giving the agencies enough flexibility to fix their own maximum amounts

depending on the agency's savings.

It is worthy to note in this connection that when the Civil Service Commission issued Memorandum Circular No. 42,

series 1992, amending Section 7 (e), Rule X of the Omnibus Civil Service Law and Rules, providing that the amount of

cash bonus to be given should not be more than P100.00 per year of service, the GSIS returned to the old computation

as authorized under Board Resolutions No. 192 and 187 dated May 16, 1989 and May 29, 1992 respectively (Annexes 8

and 9). Hence, the matter was referred to the Civil Service Commission for clarification. The Commission ruled in a

letter dated May 12, 1993 (Annex 10) addressed to PGM Cesar N. Sarino, that the availment of the award can be made

only under either system, whichever is more advantageous to the employees.

Petitioner GSIS did not squarely address the above finding of respondent COA or the Corporate Auditor. Instead, it based its

arguments on the general assumption that all the benefits and allowances subject of this petition were disallowed on the basis of

Section 12, R.A. No. 6758 and its implementing rules. This is beside the point, however, as it can readily be seen that respondent

COA's ruling on the loyalty and service cash award is actually based on a purported CSC declaration relative thereto. As a result,

there has been no real joinder of issues as far as these benefits are concerned.
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