Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83714:57944&catid=1588&Itemid=566
Timestamp: 2019-04-21 04:46:41+00:00

Document:
G.R. No. 204800, October 14, 2014 - NATIONAL TRANSMISSION CORPORATION, Petitioner, v. COMMISSION ON AUDIT, ATTY. JOSEPHINE A. TILAN, REGIONAL CLUSTER DIRECTOR AND MR. ROBERTO G. PADILLA, STATE AUDITOR IV, Respondents.
NATIONAL TRANSMISSION CORPORATION, Petitioner, v. COMMISSION ON AUDIT, ATTY. JOSEPHINE A. TILAN, REGIONAL CLUSTER DIRECTOR AND MR. ROBERTO G. PADILLA, STATE AUDITOR IV, Respondents.
Before the Court is an original action for certiorari under Rule 65, in relation to Rule 64 of the Rules of Court, and the 2009 Revised Rules of Procedure1 of the Commission on Audit (COA), seeking to nullify and set aside COA’s Decision2 dated May 26, 2009, which affirmed the Legal and Adjudication Office-Corporate’s (LAO-C) Decision requiring all persons found liable in the Notice of Disallowance (ND) 05-037 dated July 5, 2007 to refund the amount of loyalty award received, as well as its Resolution3 dated November 26, 2009.
The facts of the case are undisputed.
Effective January 1, 2002, continuous and satisfactory services in government for purposes of granting loyalty award shall include services in one or more government agencies without any gap.
The above-quoted policy specifies that only the entire service in the particular agency where a government personnel is employed as of January 1, 2002 shall be considered part of the 10th year loyalty award. Services rendered in other government agencies before January 1, 2002 shall not be considered for purposes of completing the required 10-year loyalty award.
Mr. X was employed at the National Computer Center (NCC) in May 1993 and transferred to the Department of Trade and Industry (DTI) in October 1995. Mr. X shall be entitled to the 10th year in government service Loyalty Award on October 2005. His services at [the] NCC can no longer be considered for purposes of granting the loyalty award.
However, even if X employee again transfers from DTI to another government agency on May 2004, she/he will still be entitled to receive the 10th year loyalty award by July 2005 since his services in DTI from October 1995 shall be considered. The entire service in the agency where a government personnel is employed as of January 1, 2002 shall be considered part of the 10th year loyalty award or 5th year milestone loyalty award.
Based on the sample service record you cited, said Transco employee is entitled to receive the 10th year loyalty award effective April 1, 2003 and Transco, where she/he is presently employed is obliged to pay said personnel. However, services rendered at DENR and Congress can no longer be considered for purposes of granting the loyalty award. Thus, on April 1, 2008, she/he will again be entitled to 5,000 Loyalty Award for completing the 15th year service in government.
The above transaction clearly violated the provisions of the above-mentioned EPIRA law and CSC Memorandum Circular. The attached schedule presents the total amount of loyalty award paid to NL-TRANSCO employees. Since the services of these retired employees were already terminated effective February 28, 2003 and received their separation benefits, they are considered new in the government service. Hence, for purposes of computing the rendition of continuous and satisfactory service for the grant of loyalty award, the same shall be reckoned from the date of reemployment which is March 1, 2003.
Is a retired/resigned government employee entitled to loyalty award?
Could an official or employee who retired/resigned but was reinstated or reemployed later in the service be entitled to the award?
Are the services rendered prior to the reemployment of an employee who was separated from the service with separation benefits, with or without gaps, considered for purposes of the grant?
There was no gap in the service of Transco employees when their services were severed from NPC since they were rehired the next day.
Despite petitioner’s Motion for Reconsideration,25 the COA maintained the aforequoted ruling.
MISINTERPRETED CSC MEMORANDUM CIRCULAR 06, SERIES OF 2002 (MC 06), AND ERRONEOUSLY STATED THAT AN EMPLOYEE IS ENTITLED TO LOYALTY AWARD ONLY IF HE HAS CONTINUOUSLY RENDERED THE TEN-YEAR SERVICE IN ONE PARTICULAR GOVERNMENT AGENCY.
In view of the foregoing, it would appear that the issue left for this Court’s resolution is whether or not the NPC employees who were separated from the service because of the reorganization of the electric power industry and who received their separation pay under the EPIRA Law are still entitled to receive loyalty awards under the CSC Memorandum Circular.
A loyalty award is granted to all officials and employees, in the national and local governments, including those in the state colleges and universities (SUCs) and government-owned and controlled corporations (GOCCs) with original charter, who rendered ten (10) years of continuous and satisfactory service in the government.
The particular agency where the employee or official completed the ten (10) years of continuous and satisfactory service shall grant the award.
An official or employee who incurred an aggregate of not more than 50 days authorized vacation leave without pay within the 10-year period shall be considered as having rendered continuous service for purposes of granting the loyalty award.
In the same way, an official or employee who incurred an aggregate of not more than twenty five (25) days authorized vacation leave without pay within the 5-year period may qualify for the 5-year milestone loyalty award.
The rules are well-defined. What appears to be contended is the definition of “continued service,” which respondents aver was interrupted when the subject employees were terminated from their posts in NPC and received their separation package under the EPIRA Law. On the other hand, petitioner posits that said separation benefits did not include the rights of these employees that had already accrued by reason of continuous service to the government at the time of their separation from NPC,32 such as the assailed grant of loyalty award.
While Section 63 of the EPIRA Law provides that those who avail themselves of the separation pay shall start their government service anew if absorbed by any government-owned successor company, the “reset” relates only to any and all separation benefits due to an employee once he is terminated or if he retires from service. As correctly pointed out by petitioner, what is avoided is a situation wherein an employee who was separated from service and availed himself of the separation package under the EPIRA Law, would still use the accrued years of service in NPC for purposes of computing their future separation benefits to be settled by the absorbing government agency or government-owned successor corporation.
It could not have been the intendment of the EPIRA Law to impair the employees’ rights to loyalty award, which have already accrued prior to its promulgation. Stated differently, before the EPIRA Law was enacted, the NPC employees had a fixed right to the loyalty award under the terms and conditions then obtaining. They could not therefore be excluded from its enjoyment just because they have received separation pay for the termination of their services in view of the reorganization, without violating basic precepts of fairness and due process.
Indeed, the payment or non-payment of separation pay was never made a condition for the grant of loyalty awards to these employees. The CSC Memorandum Circular neither distinguishes nor imposes a qualification for the grant of loyalty award except that: (1) effective January 1, 2002, the services are rendered in one or more government agencies without any gap; and (2) services rendered in other government agencies prior to January 1, 2002 shall not be considered. Adding the qualification of non-payment of separation pay would in effect be expanding the law inappropriately without due process.
Even in the deliberations of Congress during the passage of R.A. No. 9136, it was manifest that it was not the intention of the law to infringe upon the vested rights of NPC personnel to claim benefits under existing laws. To assure the worried and uneasy NPC employees, Congress guaranteed their entitlement to a separation pay to tide them over in the meantime. More importantly, to further allay the fears of the NPC employees, especially those who were nearing retirement age, Congress repeatedly assured them in several public and congressional hearings that on top of their separation benefits, they would still receive their retirement benefits, as long as they would qualify and meet the requirements for its entitlement.
THE CHAIRMAN (SEN. J. OSMENA). Well, the other labor representation here is Mr. Anguluan.
MR. ANGULUAN: Yes, Your Honor.
THE CHAIRMAN (SEN. J. OSMENA). Okay. Will you present your paper?
MR. ANGULUAN: We have prepared a paper which we have sent to the honorable members of the Bicam. x x x.
THE CHAIRMAN (SEN. J. OSMENA). I don't think anyone is going to deprive you of your rights under the law. You will enjoy all your rights. You will receive retirement benefits, separation pay, and all of the rights that are provided to you by law. What we have objected to in the Senate is retirement benefits higher than what everybody else gets, like 150 percent or subject to the approval of the board which means sky is the limit. So, we have objected to that. But what you are entitled to under the law, you will get under the law and nobody will deprive you of that.
THE CHAIRMAN (REP. BADELLES). They will still be subject to the same conditions. Meaning, NPC has the discretion whether to reabsorb or hire back those that avail of the separation benefits.
SEN. OSMENA (J). No. But they are not being - - the plants are not being sold, so they are - but what we are giving them is a special concession of retiring early.
No, okay. You consider . . .
THE CHAIRMAN (REP. BADELLES). We are not speaking of retirement here, we are speaking of their separation benefits . . .
SEN. OSMENA (J). Okay, separation benefits.
THE CHAIRMAN (REP. BADELLES). Precisely, if they are considered terminated.
SEN. OSMENA (J). All right. Separation . . .
THE CHAIRMAN (REP. BADELLES). A retirement plan is a different program than separation.
SEN. OSMENA (J). Separation benefits, okay.
While the foregoing pertains to the grant of retirement pay under R.A. No. 660, Presidential Decree (P.D.) No. 1146, R.A. No. 8291, and other GSIS and social security laws, on top of the separation pay already granted under the EPIRA Law, the intent of the lawmakers in awarding the separation pay can be easily ascertained from the aforequoted deliberations. Clearly, the purpose or intent of the EPIRA Law and its implementing rules and regulations was only to limit the claim for future separation benefits of employees who may be absorbed or re-hired by any government agency or government-owned or controlled corporation. It was not meant to curtail the grant of loyalty awards to employees who decided to work for the government for more than ten (10) years, but were unfortunately terminated in between due to reorganization.
Anent petitioner’s argument that the reason behind the formulation of the CSC Memorandum Circular is to recognize the dedication of individuals who preferred to work as government employees, and as a token thereof, loyalty pay is awarded,35 we find the same impressed with merit.
On one hand, the loyalty award is granted pursuant to Section 35, Chapter 5, Subtitle A, Title I, Book V of E.O. No. 292, as well as Section 7(e), Rule 10 of the Omnibus Civil Service Rules and Regulations Implementing Book V of E.O. No. 292, which provides that all members of the government workforce shall receive incentive awards, including the grant of loyalty award based on continuous and satisfactory service. The particular agency where the employee or official completed the required years of service, which in this case is Transco, is responsible for granting the award. With respect to the purpose thereof, as correctly pointed out by petitioner, the CSC Memorandum Circular aims to reward employees who have efficiently served the government for more than a decade, and opted to serve the government instead of taking employment elsewhere. It is a valuable component of an organization's overall employee recognition efforts – to reward long and dedicated service.
In the case of Santos v. Servier Philippines, Inc., citing Aquino v. National Labor Relations Commission, We declared that the receipt of retirement benefits does not bar the retiree from receiving separation pay. Separation pay is a statutory right designed to provide the employee with the wherewithal during the period that he/she is looking for another employment. On the other hand, retirement benefits are intended to help the employee enjoy the remaining years of his life, lessening the burden of worrying about his financial support, and are a form of reward for his loyalty and service to the employer. A separation pay is given during one's employable years, while retirement benefits are given during one's unemployable years. Hence, they are not mutually exclusive.
Thus, it is clear that a separation pay at the time of the reorganization of the NPC and retirement benefits at the appropriate future time are two separate and distinct entitlements. Stated otherwise, a retirement plan is a different program from a separation package.
SEC. 8. No elective or appointive public officer or employee shall receive additional, double or indirect compensation, unless specifically authorized by law, nor accept without the consent of the Congress, any present, emolument, office, or title of any kind from any foreign government.
Thus, entitlement to separation pay does not disqualify the separated employee who is likewise qualified to receive loyalty award pursuant to the CSC Memorandum Circular. Verily, when an employee has complied with the statutory requirements for the grant of loyalty award under the CSC Memorandum Circular, his right to receive what is due him by virtue thereof becomes vested and may not thereafter be revoked or impaired.
Otherwise, it would be ridiculous, if not deleterious, to deprive employees who were forced to relinquish their livelihood, of an award they have duly earned throughout their service in the government, simply because they accepted the separation pay due them from the separation or displacement. After all, being terminated from service as a consequence of the restructuring of the electric power industry or privatization of NPC assets was not their choice, but staying in the government despite that, is. Thus, not unless the loyalty award was considered in the computation of the separation pay, the same should not be withdrawn from the employees enumerated in the ND.
It cannot be gainsaid, therefore, that petitioner was of the honest belief that Transco Circular No. 2004-37 was valid and enforceable in accordance with the aforesaid CSC letter. Accordingly, the Court sustains the allowance of the loyalty awards granted to the qualified employees of Transco in accordance with the CSC Memorandum Circular.
WHEREFORE, the Court GRANTS the petition and SETS ASIDE the Decision of the Commission on Audit in Decision No. 2009-037 dated May 26, 2009, as well as its Resolution dated November 26, 2012 in Decision No. 2012-221.
Sereno, C.J., Carpio, Leonardo-De Castro, Bersamin, Del Castillo, Villarama, Jr. Perez, Mendoza, Reyes, Perlas-Bernabe, , and Leonen, JJ., concur.
2 Penned by the Chairman Reynaldo A. Villar, with Commissioner Juanito G. Espino, Jr. and Assistant Commissioner Elizabeth S. Zosa concurring; Annex “A” to Petition, rollo, pp. 24-31.
3 Penned by the Chairperson Ma. Gracia M. Pulido Tan, with Commissioners Juanito G. Espino, Jr. and Heidi L. Mendoza, concurring; Annex “B” to Petition, id. at 32-34.
4 Supra note 2, at 24.
10 Annex “D” to Petition, Id. at 37-38.
12 Supra note 2, at 25.
13 Annex “F” to Petition, rollo, pp. 44-47.
17 Annex “G” to Petition, rollo, pp. 51-52.
18 Annex “H” to Petition,id. at 53-57.
20 Supra note 18, at 53-54.
22 Supra note 2, at 27-28.
25 Annex “L” to Petition, rollo, pp. 85-96.
27 Comment to Petition, id. at 105-122.
29 Annex “J” to Petition, id. at 71.
32 Supra note 2, at 27.
33 G.R. Nos. 156556-57, October 4, 2011, 658 SCRA 420..
35 Supra note 2, at 27.
36 Betoy v. The Board of Directors, National Power Corporation, supra note 33, at 463.
37 Section 3(b)(i), Rule 33, Implementing Rules and Regulations (IRR) of the EPIRA Law.
38Betoy v. The Board of Directors, National Power Corporation, supra note 33, at 461.
44Casal v. The Commission on Audit, 538 Phil. 634, 645 (2006).
46 356 Phil. 678 (1998).
47Casal v. The Commission on Audit, supra note 43.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.