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Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. 92284 July 12, 1991

TEODORO J. SANTIAGO, petitioner, vs. THE COMMISSION ON AUDIT, and the GOVERNMENT SERVICE INSURANCE SYSTEM, respondents.

Leven S. Puno for petitioner.

Cesar R. Vidal for respondent GSIS.

CRUZ, J.:p

The basic issue presented in this case is the correct interpretation of Executive Order No. 966, Section 9, providing as follows:

Sec. 9. Highest Basic Salary Rate. The compensation of salary or pay which may be used in computing the retirement benefits shall be limited to the highest salary rate actually received by an official/employee as fixed by law and/or indicated in his duly approved appointment. This shall include salary adjustments duly authorized and implemented by the presidential issuance(s) and budget circular(s), additional basic compensation or salary indicated in an appointment duly approved as an exception to the prohibition on additional or double

compensation, merit increases, and compensation for substitutionary services or in an acting capacity. For this purpose, all other compensation and/or fringe benefits such as per diems, allowances, bonuses, overtime pay, honoraria hazard pay, flying time fees, consultancy or contractual fees, or fees in correcting and/or releasing examination papers shall not be considered in the computation of the retirement benefits of an official/employee.

The question was raised by the petitioner in connection with the computation of his retirement benefits which he claims was not made in conformity to the above-quoted requirement.

The petitioner was employed in the Commission on Audit as State Auditor IV with a monthly salary of P7,219.00. In 1988, he was assigned to the COA Auditing Unit at the Department of Transportation and Communications and detailed to the Manila International Airport Authority. On July 1, 1988, the board of directors of the MIAA passed the following resolution:

1

RESOLUTION NO. 88-70

RESOLVED, that, as recommended by Management, the designation of Mr. Teodoro J. Santiago, Jr., as Assistant General Manager for Finance and Administration, effective 15 August 1988, be approved, as it is hereby approved, subject to the following conditions:

1. He will retain his plantilla position in COA;

2. His compensation from MIAA, shall be the difference between the salary of AGM for Finance and Administration (MIAA) and that of State Auditor IV (COA); and

3. His retirement benefits shall be chargeable against COA.

This resolution was duly communicated to the COA on July 11, 1988, with a request for the petitioner's indefinite detail to the MIAA. In reply, Chairman Eufemio C. Domingo wrote MIAA on July 14, 1988, as follows:

2

. . . please be informed that we are authorizing such detail through appropriate office order up to February 15, 1989. The order includes authority to collect representation and transportation allowances (RATA) of P1,200.00 each month and other allowances attendant to the position chargeable against the funds of the NAIAA.

As regards your proposal that Mr. Santiago be allowed to collect the difference in salary of his position in the COA as State Auditor IV and his designated position as Assistant General Manager thereat, likewise chargeable against the funds of that office, this Commission interposes no objection to the proposal to pay him the difference between his present monthly salary of P7,219.00 and that of Assistant General Manager which reportedly amounts to P13,068.00 a month or a monthly difference of P5,849.00, provided that he is formally designated (not appointed) Assistant General Manager by the Board of Directors, NAIAA, and that payment of his salary differential is approved by the same office.

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On August 10, 1988, Secretary Reinerio O. Reyes, concurrently chairman of the MIAA board of directors, issued an office order formally designating the petitioner as Acting Assistant General

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Manager for Finance and Administration, effective August 16, 1988.

3

The petitioner served in this capacity and collected the differential salary of P5,849.00 plus his salary of P7,219.00 for a total compensation of P13,068.00. He received this compensation until December 5, 1988, when he was transferred to the Presidential Management Staff under COA Office Order No. 8811448 dated December 6, 1988.

On March 1, 1989, the petitioner retired after working in the government for 44 years.

In computing his retirement benefits, the Government Service Insurance System used as basis the amount of P13,068.00, considering this the highest basic salary rate received by the petitioner in the course of his employment.

4 The COA disagreed,

however, and paid his retirement benefits on the basis of only his monthly salary of P7,219.00 as State Auditor IV.

5

The petitioner requested recomputation based on what he claimed as his highest basic salary rate of P13,068.00. This was denied on December 8, 1989, and he was so notified on February 5, 1990. On March 7, 1990, he came to this Court to seek reversal of the decision of the COA on the ground of grave abuse of discretion.

We note at the outset that there is no dispute regarding the legality of the petitioner's occupying the second position in the MIAA and receiving additional compensation for his services therein. As the Solicitor General observed. "What the petitioner was receiving from the MIAA was the additional compensation allowed under Section 17 of Act No. 4187 which, in turn, is allowed under Section 8, Paragraph B, Article IX of the Constitution."

6

In Quimzon v. Ozaeta, 7 this Court held that double appointments

are not prohibited as long as the positions involved are not incompatible, except that the officer or employee appointed cannot receive additional or double compensation unless

specifically authorized by law. The additional compensation received by the petitioner is not an issue in the case at bar because of its express approval by the COA and the admission of the Solicitor General that it is allowed under the cited provision.

More specifically, Section 17 of Act No. 4187 provides:

Any existing act, rule or order to the contrary notwithstanding, no full time officer or employee of the government shall hereafter receive directly or indirectly any kind of additional or extra compensation or salary including per diems and bonuses from any fund of the government, its dependencies, and semi-government entities or boards created by law except:

(1) Officers serving as chairman or members of entities and enterprise organized, operated, owned or controlled by the government, who may be paid per them for each meeting actually attended or when an official travel;

(2) Auditors and accountants;

(3) Provincial and municipal treasurers and their employees;

(4) Employees serving as observers of the Weather Bureau; and

(5) Those authorized to receive extra or additional compensation by virtue of the provision of this Act. (Emphasis supplied)

The Solicitor General argues, albeit not too strongly, that the additional compensation received by the petitioner was merely an honorarium and not a salary. As a mere honorarium, it would not fall under the provision of Section 9 and so should not be added to his salary in computing his retirement benefits.

We cannot accept this contention. An honorarium is defined as something given not as a matter of obligation but in appreciation for services rendered, a voluntary donation in consideration of services which admit of no compensation in money.

8 The

additional compensation given to the petitioner was in the nature of a salary because it was receive by him as a matter of right in recompense for services rendered by him as Acting Assistant General Manager for Finance and Administration. In fact, even Chairman Domingo referred to it in his letter dated July 14, 1988, as the petitioner's "salary differential."

The Solicitor General's main argument is that the petitioner cannot invoke Section 9 because he was not appointed to the second position in the MIAA but only designated thereto. It is stressed that under the said provision, "the compensation of salary or pay which may be used in computing the retirement benefits shall be received by an official employee as fixed by law and/or indicated in his duly approved appointment." The petitioner's additional salary was fixed not in a duly approved appointment but only in a designation.

Belittling this argument, the petitioner maintains that there is no substantial distinction between appointment and designation. He cites Mechem, who defines appointment as "the act of designation by the executive officer, board or body, to whom that power has been delegated, of the individual, who is to exercise the functions of a given office."

9 He also

invokes Borromeo v. Mariano, 10

where this Court said that "the

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term "appoint," whether regarded in its legal or in its ordinary acceptation, is applied to the nomination or designation of an individual."

Strictly speaking, there is an accepted legal distinction between appointment and designation. While appointment is the selection by the proper authority of an individual who is to exercise the functions of a given office, designation, on the other hand, connotes merely the imposition of additional duties, usually by law, upon a person already in the public service by virtue of an earlier appointment (or election).

11 Thus, the

appointed Secretary of Trade and Industry is, by statutory designation, a member of the National Economic and Development Authority.

12 A person may also be designated in an

acting capacity, as when he is called upon to fill a vacancy pending the selection of a permanent appointee thereto or, more usually, the return of the regular incumbent. In the absence of the permanent Secretary for example, an undersecretary is designated acting head of the department.

13

As the Court said in Binamira v. Garrucho: 14

Appointment may be defined as the selection, by the authority vested with the power, of an individual who is to exercise the functions of a given office. When completed, usually with its confirmation, the appointment results in security of tenure for the person chosen unless he is replaceable at pleasure because of the nature of his office. Designation, on the other hand, connotes merely the imposition by law of additional duties on an incumbent official, as where, in the case before us, the Secretary of Tourism is designated Chairman of the Board of Directors of the Philippine Tourism Authority, or where, under the Constitution, three Justices of the Supreme Court are designated by the Chief Justice to sit in the Electoral Tribunal of the Senate or the House of Representatives. It is said that appointment is

essentially executive while designation is legislative in nature.

Nevertheless, we agree with the petitioner that in the law in question, the term "appointment" was used in a general sense to include the term "designation." In other words, no distinction was intended between the two terms in Section 9 of Executive Order No. 966. We think this to be the more reasonable interpretation, especially considering that the provision includes in the highest salary rate "compensation for substitutionary services or in an acting capacity." This need not always be conferred by a permanent appointment. A contrary reading would, in our view, militate against the letter of the law, not to mention its spirit as we perceive it. That spirit seeks to extend the maximum benefits to the retiree as an additional if belated recognition of his many years of loyal and efficient service in the government.

As thus interpreted, Section 9 clearly covers the petitioner, who was designated Acting Assistant General Manager for Finance and Administration in the office order issued by Secretary Reyes on August 10, 1988. The position was then vacant and could be filled either by permanent appointment or by temporary designation. It cannot be said that the second position was only an extension of the petitioner's office as State Auditor IV in the Commission on Audit as otherwise there would have been no need for his designation thereto. The second office was distinct and separate from his position in the Commission on Audit. For the additional services he rendered for the MIAA, he was entitled to additional compensation which, following the letter and spirit of Section 9, should be included in his highest basic salary rate.

It is noteworthy that the petitioner occupied the second office not only for a few days or weeks but for more than three months. His designation as Acting Assistant General Manager for Finance and Administration was not a mere accommodation by the MIAA. On the contrary, in his letter to Chairman Domingo requesting the petitioner's services. MIAA General Manager Evergisto C. Macatulad said, "Considering his qualifications and work experience, we believe that a finance man of his stature

and caliber can be of great help in the efficient and effective performance of the Airport's functions."

Retirement laws should be interpreted liberally in favor of the retiree because their intention is to provide for his sustenance, and hopefully even comfort, when he no longer has the stamina to continue earning his livelihood. After devoting the best years of his life to the public service, he deserves the appreciation of a grateful government as best concretely expressed in a generous retirement gratuity commensurate with the value and length of his services. That generosity is the least he should expect now that his work is done and his youth is gone. Even as he feels the weariness in his bones and glimpses the approach of the lengthening shadows, he should be able to luxuriate in the thought that he did his task well, and was rewarded for it.

WHEREFORE, the petition is GRANTED. The challenged resolution is SET ASIDE and judgment is hereby rendered DIRECTING the computation of the petitioner's retirement benefits on the basis of his Highest Basic Salary Rate of P13,068.00, It is so ordered.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Sarmiento, Grio-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.

Gancayco, J., is on leave.

G.R. No. 98395 October 28, 1994

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. CIVIL SERVICE COMMISSION and DR. MANUEL BARADERO, respondents.

G.R. No. 102449

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GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. CIVIL SERVICE COMMISSION and MATILDE S. BELO, respondents.

Belo, Abiera & Associates for Matilde S. Belo.

QUIASON, J.:

Before us are two petitions docketed as G.R. No. 98395 and G.R. No. 102449. The petitions were consolidated since they principally involved the same issue and parties.

We grant both petitions.

I

G.R. No. 98395

This is a petition for certiorari under Rule 65 of the Revised Rules of Court, to reverse and set aside four orders of the Civil Service Commission (CSC), namely: (1) the Resolution No. 90-642 dated July 16, 1990, which resolved as creditable for retirement purposes the service of private respondent Manuel Baradero, who served as Sangguniang Bayan member on a per diem basis from January 1, 1976 to October 20, 1978; (2) the Order dated September 20, 1990 directing the implementation of CSC Resolution No. 90-642; (3) the Order dated December 7, 1990 directing the President and General Manager of petitioner Government Service Insurance System (GSIS) to show cause why they should not be held in contempt for the delay in the implementation of Resolution No. 90-642; and (4) the Resolution No. 91-526 dated April 23, 1991, which dismissed petitioner's Motion for Reconsideration of the Order dated September 20, 1990.

Dr. Manuel Baradero was a government employee, who occupied the position of Medical Officer IV in the Philippine Medical Care

Commission, until he reached the mandatory age of retirement of 65 years old.

He served the Philippine Army as an enlisted man from November 17, 1942 until June 30, 1945. He resumed his government career on January 1, 1976, when he was elected a member of the Sangguniang Bayan of the Municipality of La Castellana, Negros Occidental. As such, he received per diem for every session attended. He resigned from the Sangguniang Bayan on October 10, 1976. On October 20, 1978, he was appointed Medical Officer I at the Philippine Medical Care Commission, where he served until he reached the compulsory retirement age of 65 years old (Rollo, p. 28).

Prior to turning 65 years old, Dr. Baradero applied for compulsory retirement with petitioner, which credited in his favor 13 years of government service, excluding his term as a Sangguniang Bayan member. He requested an extension of service from the CSC to enable him to complete 15 years of government service. This was necessary so that he may avail of retirement benefits.

The request was denied by the CSC in its Resolution No. 90-642 dated July 16, 1990. Instead, it ruled that Dr. Baradero's two-year stint as a member of the Sangguniang Bayan be considered as creditable service, hence completing the mandatory 15-year service and making him eligible for retirement benefits (Rollo, p. 28).

The GSIS contested the resolution, alleging that:

(1) Per diem was expressly excluded in the definition of compensation in RA 1573 on June 16, 1956. Prior to this, services paid on per diem basis were considered creditable.

(2) Per diems were excluded from the definition of compensation because " per diems, by themselves are usually of minimal

amounts which cannot actually support an insurance coverage" (Office of the General Counsel Opinion 08-85, June 3, 1985). It had been maintained that "salary is essential to insurance in the System, as it serves as the basis for the determination of the monthly premiums or contributions" (Government Corporate Counsel Opinion No. 198, s. 1957).

(3) In the case of the late Commissioner Inocencio V. Ferrer of the Social Security System, Commissioner Ferrer received per diems not only for attending meetings of the Commission but also for hearing cases as hearing officer. With the almost daily hearings of Commissioner Ferrer, he was said to have been performing full-time service and received substantial amount of per diems such that "the so-called per diems that he received were not really per diems but compensation" (OGC Opinion 08-85). Hence, his services as hearing Commissioner were considered creditable, but his per diem for attending the board meetings were excluded in the computation of his retirement benefits (Rollo, p. 32).

The GSIS advised that the CSC extend the services of Dr. Baradero until he completes the required 15 years so that he may avail of retirement benefits.

On September 20, 1990, the CSC issued an order directing the GSIS to implement Resolution No. 90-642 (Rollo, p. 35).

The GSIS filed a motion for reconsideration of the order (Rollo, p. 37), which was denied by the CSC in its Resolution No. 91-526 dated April 23, 1991. The resolution further directed the GSIS to comply with the CSC resolution and order under pain of contempt (Rollo, p. 49).

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Hence, this petition where the GSIS charges the CSC with grave abuse of discretion in ruling that: (1) services rendered on a per diem basis is creditable for purposes of retirement; and (2) it has exclusive jurisdiction in the determination of services which are creditable.

The Office of the Solicitor General filed a "Manifestation and Motion in Lieu of Comment," which submitted its position that the law expressly excludes services rendered on per diem basis in determining creditable government service for retirement purposes.

The Solicitor General is of the opinion that the CSC's resolutions and order crediting such services were in violation of the law, and encroached on the power of the GSIS to administer and implement retirement laws. He therefore recommended that the instant petition be given due course (Rollo, p. 100).

G.R. No. 102449

This is a petition for certiorari under Rule 65 of the Revised Rules of Court, to reverse and set aside three orders of the CSC, namely: (1) the Resolution dated June 7, 1989, which resolved as creditable for retirement purposes the services rendered by respondent Matilde S. Belo, who served as Vice-Governor of Capiz in a hold-over capacity from December 31, 1976 to January 1, 1979; (2) the Order dated July 18, 1991 directing the President and General Manager of petitioner to show cause why they should not be held in contempt for the delay in the implementation of CSC Resolution No. 89-368; and (3) the Order dated October 3, 1991, finding the President and General Manager of petitioner guilty of indirect contempt with penalty of a fine of P1,000.00 per day of defiance until the implementation of CSC Resolution No. 89-368.

Matilde Belo retired from the government service on February 2, 1988. At the time of her retirement, Belo was the Vice-Governor of Capiz in a hold-over capacity. She served as Governor of Capiz from January 25, 1972 until February 1, 1988.

As an elected government official, Belo received a fixed salary of P13,000.00 per annum from January 25, 1976 until December 31, 1976. Thereafter, she held the same position in a hold-over capacity and was remunerated as follows: (1) from December 31, 1976 until January 1, 1979, she received per diem for every session attended of the Sangguniang Panlalawigan; and (2) from December 31, 1979 until February 1, 1988, she received a fixed salary ranging from P23,000.00 to P45,000.00 per annum (Rollo, p. 25).

Belo sought an opinion from the CSC to determine if the services she rendered from December 31, 1976 until January 1, 1979, in which period she was paid on a per diem basis, is creditable for retirement purposes.

In response to the query, the CSC issued Resolution No. 89-368 dated June 7, 1987, which affirmed that her services for said period was creditable (Rollo, pp. 25-26).

Belo's application for retirement was referred to the GSIS Committee on Claims, which adopted a position contrary to that of the CSC.

On August 6, 1991, the GSIS received the Order dated July 18, 1991, which directed its President and General Manager to show cause why they should not be held in contempt for the delay in the implementation of CSC Resolution No. 89-368 (Rollo, pp. 28).

The GSIS filed its "Manifestation/Explanation," alleging that it cannot implement the resolution considering that it has a pending petition for certiorari before this Court in the case of Dr. Baradero (G.R. No. 98395), where the same issue was raised (Rollo, p. 30).

On October 3, 1991, the CSC issued an order finding the President and General Manager of GSIS guilty of indirect contempt. Both were meted a penalty of P1,000.00 fine for each day of defiance until the implementation of Resolution No. 89-368. The CSC noted that the mere pendency of the case of Dr. Baradero cannot prevent the implementation of its resolution

unless this Court issues a temporary restraining order, and that said case had nothing to do with the case of Belo (Rollo, p. 34).

The GSIS filed the instant petition, charging the CSC with committing the same errors in G.R. No. 98395.

The Office of the Solicitor General manifested that it was adopting its "Manifestation and Motion in Lieu of Comment" filed in G.R. No. 98395, holding the view that the law excluded services rendered on a per diem basis, in crediting the length of service for retirement purposes (Rollo, p. 62).

In her comment, Belo insisted that CSC was correct in finding that her services rendered on a per diem basis are creditable for retirement purposes. She claimed that the case of Commissioner Ferrer of the Social Security Commission applied to her case by analogy.

She likewise contended that Executive Order No. 292 (Administrative Code of 1987) vests in the CSC jurisdiction over matters regarding the accreditation of government services. She particularly cites Section 12, Chapter 3, Book V thereof which enumerates the powers and functions of the CSC, among which is to:

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17. Administer the retirement program for government employees and accredit government servicesand evaluate qualifications for retirement (Emphasis supplied);

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II

The issues to be resolved are: (1) Is government service rendered on a per diem basis creditable for computing the length of service for retirement purposes; and (2) Is petitioner the proper

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government agency in determining what service is creditable for retirement purposes?

Section 35 of P.D. No. 1146 (Government Service Insurance Act of 1987) vests in petitioner the power to implement the provisions of said law, which includes the guaranty of retirement benefits.

Under the epigraph "Benefits," Section 10 thereof provides for the computation of service, and reads:

xxx xxx xxx

Computation of Service.

For the purpose of this section, the term service shall include full time service with compensation:Provided, That part-time and other services with compensation may be included under such rules and regulations prescribed by the System (Emphasis supplied).

It is therefore material in the claim of retirement benefits that the employee should have rendered service with compensation.

"Compensation" is defined by Section 1(c) of R.A. No. 1573, which amended Section 1(c) of C.A. No. 186 (Government Service Insurance Act), thus:

(c) "Salary, pay, or compensation" shall be construed as to exclude all bonuses, per diems, allowances and overtime pay, or salary, pay or compensation given in addition to the base pay of the position or rank as fixed by law or regulations (Emphasis supplied).

A similar definition is provided in Section 2(i) of P.D. No. 1146:

(i) Compensation the basic pay or salary received by an employee, pursuant to his employment/appointments, excluding per diems, bonuses, overtime pay, and allowances (Emphasis supplied).

The law is very clear in its intent to exclude per diem in the definition of "compensation." Originally, per diem was not among those excluded in the definition of compensation (See Section 1(c) of C.A. No. 186), not until the passage of the amending laws which redefined it to exclude per diem.

The law not only defines the word "compensation," but it also distinguishes it from other forms of remunerations. Such distinction is significant not only for purposes of computing the contribution of the employers and employees to the GSIS but also for computing the employees' service record and benefits.

The Secretary of Justice, in his Opinion No. 196, s. 1976, opined:

. . . That such receipt of salary is an indispensable requirement for membership, especially in the Retirement Insurance Fund, is logically inferred from these provisions of the GSIS Act: Section 5 which requires that to receive the benefits provided for and described in the GSIS Act, each official or employee who is a member of the System and his employer shall pay the prescribed monthly rates of contributions or premiums based on a percentage of the "monthly salary" of the employee or official; Sections 11 and 12, providing that the amount of retirement annuity or gratuity, or death or disability benefits granted thereunder, shall be based on the monthly "salary"; and Section 13, providing that the term "service" for purposes of computing the aggregate period of service which forms the basis for retirement, shall include only service

with "compensation" (Emphasis supplied; G.R. No. 98395,Rollo, p. 67).

In essence, the grant of retirement benefits necessitates an obligation on the part of the employee to contribute to the insurance fund of petitioner. Such obligation only arises where the employee is receiving "salary, pay or compensation" and not per diem, which is not capable of paying off the premium contributions to petitioner.

Also enlightening is the "Joint Civil Service Commission, Department of Budget and Management and Government Service Insurance System Circular No. 1-89" dated July 13, 1989. It prescribes the guidelines on the filing and processing of retirement applications, and we quote:

IV. Certification of Services Rendered.

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C. In certifying to services rendered, Heads and Personnel Officers/Administrative Officers of agencies shall be guided by the existing laws, rules and regulations followed by GSIS in determiningcreditable services for retirement purposes which are as follows:

1. All previous services rendered by an official/employee pursuant to a duly approved appointment, including those of Presidential appointees, to a position in the Civil Service with compensation or salary or pay whether on permanent, provisional, temporary, emergency, substitute, or casual status, and whether paid monthly, daily, or hourly, subject to these conditions:

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2. Services of government employees paid on per diem basis up to June 15, 1956 only.

D. All cases not covered by the procedures/guidelines above shall be referred to GSIS for final determination (G.R. No. 98395, Rollo, pp. 75 and 77; Emphasis supplied).

The circular is clear that services rendered on a per diem bases are not creditable for retirement purposes. It likewise confirms that it is the GSIS, and not the CSC which is the proper agency in determining services which are creditable for retirement purposes.

In Profeta v. Drilon, 216 SCRA 777 (1992), we ruled that the GSIS has the original and exclusive jurisdiction to determine whether a member is qualified or not to avail of the old-age pension benefit under P.D. No. 1146, based on its computation of a member's years of government service. By analogy, we reiterate our ruling in the cases at bench.

The case of Commissioner Inocencio V. Ferrer of the Social Security System is unapplicable. While it is true that Commissioner Ferrer was granted retirement benefits notwithstanding being paid on a per diem basis, we find merit in the GSIS explanation that the grant was consistent with its policy, since the service which was creditable in Commissioner Ferrer's favor was his full time service as Hearing Officer, and not his attendance at board meetings, which was not credited.

Anent the CSC's power to "administer the retirement program . . . and accredit government services . . . for retirement" (Administrative Code of 1987, Book V, Chapter 3, Section 12), we rule that CSC role is ministerial. "Accredit" merely means acknowledge. It must not be confused with the power to determine what service is creditable for retirement purposes. It has been established that such power belongs to the GSIS (cf. Profeta v. Drilon, 216 SCRA 777 [1992]).

The aforementioned provision relied upon by public respondent is derived from the Administrative Code of 1987, which is a general law. It cannot prevail over the Revised Government Insurance Act of 1977, which is a special law (cf. Cena v. Civil Service Commission, 211 SCRA 179 [1992]).

With the passage of the Administrative Code of 1987, members of the Sangguniang Bayan are no longer paid per diem, but are now receiving compensation. Thus, services rendered after the effectivity of the law may therefore be considered creditable for retirement purposes.

Private respondents both claim that retirement laws must be liberally interpreted in favor of the retirees. However, the doctrine of liberal construction cannot be applied in the instant petitions, where the law invoked is clear, unequivocal and leaves no room for interpretation or construction. Moreover, to accommodate private respondents' plea will contravene the purpose for which the law was enacted, and will defeat the ends which it sought to attain (cf. Re: Judge Alex Z. Reyes, 216 SCRA 720 [1992])

WHEREFORE, the petitions are both GRANTED. The CSC resolutions and orders in question are REVERSED and SET ASIDE. No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. Nos. 98395-102449 June 19, 1995

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs.

CIVIL SERVICE COMMISSION and DR. MANUEL BARADERO, respondents.

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. CIVIL SERVICE COMMISSION and MATILDE S. BELO, respondents.

KAPUNAN, J.:

In our decision dated October 28, 1994 we held that government service rendered on a per diem basis is not creditable in computing the length of service for retirement purposes. Thus, we reversed the questioned resolutions and orders of the Civil Service Commission (CSC) requiring the Government Service Insurance System (GSIS) to consider creditable the services of private respondents on a per diem basis.

However, private respondent Matilde S. Belo in G.R. No 102449 filed a motion for reconsideration dated 17 November 1994, of this Court 's decision of October 28, 1994. She insists that the services rendered by her as Vice Governor of Capiz, between December 31, 1975 to January 1, 1979, be considered as creditable for purposes of retirement. The Government Service Insurance System likewise filed a motion for reconsideration on November 22, 1984 in behalf of both private respondents Belo and Dr. Manuel Baradero on essentially the same grounds. We shall deal with both motions together.

Central to the averments on the aforestated motions for reconsideration is the question of whether or not regular service in government on a per diem basis, without any other form of compensation or emolument, is compensation within the contemplation of the term "service with compensation" under the Government Service Insurance Act of 1987.

After a careful consideration of the arguments in both motions, we are compelled to reconsider our decision.

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While what respondents Belo and Baradero received were denominated as "per diem," the amounts received were actually in the nature of a compensation or pay. What should therefore be considered as controlling in both cases would be the nature of remuneration, not the label attached to it.

Respondent Belo held the position of Vice-Governor of Capiz continuously between January 5, 1972 up to February 1, 1988. From January 25, 1972 up to December 31, 1979, she held office by virtue of an election and was paid a fixed salary.

1 From

December 31, 1979 up to February 1, 1988, she held the position of Vice Governor of Capiz in a holdover capacity, broken down into two periods:

2

1. A period in which she was paid on a per diem basis from December 31, 1976 to December 31, 1979; and

2. A period in which she was paid a fixed salary from January 1, 1980 to February 1,1988.

In its June 7, 1989 Resolution 3

on the matter, CSC held that the services rendered for the first holdover period between January 31, 1976 to January 1, 1979 was creditable for purposes of retirement. CSC noted that during the entire holdover period, respondent Belo actually served on a full time basis as Vice Governor and was on call 24 hours a day. Disagreeing with the CSC's insistence that the period in which respondent Belo was paid on a per diem basis should be credited in computing the number of years of creditable service to the government, GSIS subsequently filed a petition for certiorari before this court, questioning the orders of the CSC. Agreeing that per diems were not compensation within the meaning of Section 1(c) of R.A. 1573 which amended Section 1(c) of C.A. No. 186 (Government Service Insurance Act), we granted the petitions in G.R. Nos. 98395 and 102449,

4 and reversed the CSC Orders and

Resolutions in question.

A review of the circumstances surrounding payment to respondent Belo of the per diems in question convinces us that

her motion is meritorious. We are convinced that the "per diem" she received was actually paid for in the performance of her duties as Vice-Governor of Capiz in a holdover capacity not as the per diem referred to by section 1(c) of R.A. No 1573 which amended Section 1(c) of C.A. No. 186 (Government Insurance Service Act). A closer look at the aforecited provision, moreover, reveals a legislative intent to make a clear distinction between salary, pay or compensation, on one hand, and other incidental allowances, including per diems on the other. Section 1(c) provides:

(c) Salary, pay or compensation shall be construed as to exclude all bonuses, per diems, allowances and overtime pay, or salary, pay or compensation given to the base pay of the position or rank as fixed by law or regulations.

5

Since it is generally held that an allowance for expenses incident to the discharge of an office is not a salary of office,

6 it follows that if the remuneration received by a public

official in the performance of his duties does not constitute a mere "allowance for expenses" but appears to be his actual base pay, then no amount of categorizing the salary as base pay, a "per diem" would take the allowances received by petitioner from the term service with compensation for the purpose of computing the number of years of service in government. Furthermore, it would grossly violate the law's intent to reward the public servant's years of dedicated service to government for us to gloss over the circumstances surrounding the payment of the said remunerations to the petitioner in taking a purely mechanical approach to the problem by accepting an attached label at face value.

In G.R. No. 98395, the period disputed was served by respondent Baradero as a member of the Sangguniang Bayan of the Municipality of La Castellana, Negros Occidental between January 1, 1976 to October 10, 1978 where he was likewise paid on a per diem basis. It is not disputed that during this period, respondent Baradero rendered full services to the government as a member of the Sangguniang Bayan. In fact, on the basis of its

earlier resolution on the case of respondent Belo, the Civil Service Commission recognized the period in which respondent Baradero served as a member of the Sangguniang Bayan as creditable for retirement purposes instead of allowing his petition for extension of service in order to complete the 15 year period of service required for the purpose of qualifying for retirement benefits.

7

In the sense in which the phrase "per diem" is used under the Government Service Insurance Law, a per diem is a daily allowance given for each day an officer or employee of government is away from his home base.

8 This is its traditional

meaning: its usual signification is as a reimbursement for extra expenses incurred by the public official in the performance of his duties.

9 Under this definition the per diem intended to cover the

cost of lodging and subsistence of officers and employees when the latter are on duty outside of their permanent station.

10

On the other hand, a per diem could rightfully be considered a compensation or remuneration attached to an office.

11 Under

the circumstances obtaining in the case of respondent Belo the per diems received by her during the period that she acted in holdover capacity obviously were in the nature of compensation or remuneration for her services as Vice Governor of the Province of Capiz, rather than as a reimbursement for incidental expenses incurred while away from her home base. In connection with this, it is important to lay stress to the following facts:

1. Petitioner rendered service to the government continuously from January 25, 1972 to February 1, 1988 as Vice Governor of the Province of Capiz. During a portion of the holdover-period, i.e., from December 31, 1976 to January 11 1979, payment for her services to the government was through per diems for every regular or special session of the Sangguniang Panlalawigan attended.

12

2. The CSC noted that: "[F]ormer Vice Governor Belo was on a full time basis when

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she served . . . on a hold-over capacity. . . As such provincial official she is (sic) legally and factually on call by the provincial people and the province more than eight hours a day, or at any time of the day beyond the prescribed working hours.

3. She received no other forms of remuneration during the disputed period.

13

The same could be said of the services rendered by respondent Baradero, who, before and after the period in question had an unblemished record of service to the government as a member of the army and as a medical officer of the Philippine Medicare Commission. The disputed period was served on a full-time basis regardless of the denomination given to the compensation received by him.

What ought to be controlling in the cases at bench therefore, should be the nature of the remuneration rather than the label attached to it. While there is no dispute that the law excepting per diems from the definition of compensation is clear and requires no interpretation, however, since the term per diem may be construed either as compensation or as allowance, it would be necessary for us to inquire whether the term per diem in the GSIS Law refers to one or the other signification. As explained above, it is plainly obvious that per diem as compensation, is not what the law contemplates. The clear intent of the Government Insurance Law was to exclude those extra incidental expenses or incurred on a daily basis covered by the traditional definition of the term per diem. An important fact missed from our earlier decision was that, while respondent Belo was paid on a per diembasis during her first holdover period as Vice Governor she was subsequently paid a fixed salary, which apparently rectified an otherwise anomalous situation. The services rendered by respondent Belo having been continuous, the disputed period should be credited for purposes of retirement.

On the other hand, respondent Baradero was willing to serve two additional years of service to government in order to complete

the 15 year period required by our retirement laws. The Civil Service Commission felt this was unnecessary and denied the same on the ground that the period served on a per diem basis, was, like the disputed period in the Belo case, creditable.

14

The distinctions between salary and per diem made hereinabove were in fact adverted to in our original decision dated October 28, 1994. In explaining the allowance of service rendered on a per diem basis in the case ofInocencio vs. Ferrer of the Social Security System, we noted with approval the Government Service Insurance System's explanation that the per diem service which was credited for purposes of retirement was Commissioner Ferrer's full time service as Hearing Officer not his per diem service for attendance at Board Meetings. Even then, we indirectly noted the difference between per diem paid as compensation for services rendered on a full time basis and per diem as allowance for incidental expenses. Respondent Belo asserts, with reason, that the per diems paid to her, while reckoned on the basis of attendance in Board Meetings, were for her full time services as Vice Governor of the Province of Capiz. In fact, the same service, albeit still on a holdover basis, was eventually paid with a fixed salary.

Retirement benefits given to government employees in effect reward them for giving the best years of their lives to the service of their country. This is especially true with those in government service occupying positions of leadership or positions requiring management skills because the years they devote to government service could be spent more profitably in lucrative appointments in the private sector. In exchange for their selfless dedication to government service, they enjoy security of tenure and are ensured of a reasonable amount of support after they leave the government. The basis for the provision of retirement benefits is, therefore, service to government. While a government insurance system rationalizes the management of funds necessary to keep this system of retirement support afloat and is partly dependent on contributions made by the thousands of members of the system, the fact that these contributions are minimal when compared to the amount of retirement benefits actually received shows that such contributions, while necessary, are not absolutely determinative in drawing up criteria for those who would qualify as recipients of the retirement benefit system.

It cannot be convincingly asserted that petitioners could not avail themselves of the benefits of the policy because no deductions were made from their salaries during the disputed periods when they were paid on a per diembasis. In respondent Belo's case, before and after that short interregnum, she was paid a fixed salary. She was not duly informed that short period was not to be credited in computing the length of her service for retirement purposes. She assumed in all good faith that she continued to be covered by the GSIS insurance benefits considering that in fact and in practice the deductions are virtually mandatorily made from all government employees on an essentially involuntary basis. Similarly, had respondent Baradero been informed of the need to pay the required deductions for the purpose of qualifying for retirement benefits, he would have willingly paid the required sums. In a sense, the contract made between the GSIS and the government employee is done on a take-it-or-leave-it basis, that is, it is a virtual contract of adhesion which gives the employee no choice but to involuntarily accede to the deductions made from their oftentimes meager salaries. If the GSIS did not deduct, it was by its own choice: contributions were exacted from petitioner before and after the disputed period. To assert that petitioners would have been entitled to benefits had they opted for optional deductions at that point misses the principal fact in issue here, which is the question as to whether or not the disputed periods should be credited as service with compensation for the purposes of retirement.

Moreover, the source of GSIS benefits is not in essence merely contractual; rather, it is a social legislation as clearly indicated in the "whereas" of Presidential Decree No. 1146, to wit:

WHEREAS, provisions of existing laws that have prejudiced, rather than benefited, the government employee; restricted, rather than broadened, his benefits, prolonged, rather than facilitated the payment of benefits, must now yield to his paramount welfare;

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WHEREAS, the social security and insurance benefits of government employees must be continuously re-examined and improved to assure comprehensive and integrated social security and insurance programs that will provide benefits responsive to their needs and those of their dependents in the event of sickness, disability, death, retirement, and other contingencies; and to serve as a fitting reward for dedicated public service;

WHEREAS, in the light existing economic conditions affecting the welfare of government employees there is a need to expand and improve the social security and insurance programs administered by the Government Service Insurance Systems, specifically, among others, by increasing pension benefits, expanding disability benefits, introducing survivorship benefits, introducing sickness income benefits, and eventually extending the compulsory coverage of these programs to all government employees regardless of employment status.

The situation as far as private respondents and the GSIS are concerned could be rectified by deducting a reasonable amount corresponding to the contributions which should have been deducted during the period from the amount of retirement benefits accruing to them. It would be grossly inequitable as it would violate the spirit of the government retirement and insurance laws to permanently penalize both respondents Belo and Baradero by ignoring the fact of actual period of service to government with compensation, and deny them the retirement privileges that they, for their unselfish service to the government justly deserve. Under the peculiar circumstances of the case at bench, the demand for equity prompts us to regard spirit not letter, and intent, not form, in according substantial justice to both respondents, where the law, through its inflexible rules might prove inadequate.

WHEREFORE, the instant motion is hereby GRANTED, our decision dated October 28, 1994 RECONSIDERED and the questioned resolutions and orders of the CSC requiring GSIS to consider creditable the services of private respondents on a per diem basis AFFIRMED.

SO ORDERED.

Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. 97419 July 3, 1992

GAUDENCIO T. CENA, petitioner, vs. THE CIVIL SERVICE COMMISSION, and THE HON. PATRICIA A. STO. TOMAS, in her capacity as Chairman of the Civil Service Commission, respondents.

MEDIALDEA, J.:

May a government employee who has reached the compulsory retirement age of 65 years, but who has rendered 11 years, 9 months and 6 days of government service, be allowed to continue in the service to complete the 15-year service requirement to enable him to retire with the benefits of an old-age pension under Section 11 par. (b) of the Revised Government Service Insurance Act of 1977? This is the issue raised before this Court by petitioner Gaudencio T. Cena, a Registrar of the Register of Deeds of Malabon, Metro Manila.

The facts are not disputed.

Petitioner Gaudencio T. Cena entered the government service on November 16, 1978 as Legal Officer II of the Law Department of Caloocan City where he stayed for seven (7) years until his transfer on November 16, 1986 to the Office of the Congressman of the First District of Caloocan City where he worked for only three (3) months, or until February 15, 1987, as Supervising Staff Officer.

On July 16, 1987, he was appointed as Registrar of the Register of Deeds of Malabon, Metro Manila, the position he held at the time he reached the compulsory retirement age of 65 years on January 22, 1991. By then, he would have rendered a total government service of 11 years, 9 months and 6 days. Before reaching his 65th birthday, he requested the Secretary of Justice, through Administrator Teodoro G. Bonifacio of the Land Registration Authority (LRA), that he be allowed to extend his service to complete the 15-year service requirement to enable him to retire with full benefits of old-age pension under Section 11, par. (b) of P.D. 1146.

The LRA Administrator, for his part, sought a ruling from the Civil Service Commission whether or not to allow the extension of service of petitioner Cena as he is covered by Civil Service Memorandum No. 27, series 1990. In his 2nd Indorsement dated August 6, 1990, the LRA Administrator observed that if petitioner's service as of January 22, 1991 of 10 years, 6 months and 6 days (should be 11 years, 9 months and 6 days) would be extended to 15 years, he would have to retire on April 15, 1994 at the age of 68 years.

On July 31, 1990, the Civil Service Commission denied petitioner Cena's request for extension of service in its CSC Resolution No. 90-681, declaring therein, that Mr. Cena shall be considered retired from the service on January 22, 1991, the date when he shall reach the compulsory retirement age of sixty-five (65) years, unless his retention for another year is sought by the head of office under Civil Service Memorandum Circular No. 27, s. 1990.

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Petitioner Cena filed a motion for reconsideration. On October 17, 1990, the Civil Service Commission set aside its CSC Resolution No. 90-681 and allowed Gaudencio Cena a one-year extension of his service from January 22, 1991 to January 22, 1992, citing CSC Memorandum Circular No. 27, series of 1990, the pertinent of which reads:

1. Any request for the extension of service of compulsory retirees to complete the fifteen (15) years service requirement for retirement shall be allowed only to permanent appointees in the career service who are regular members of the Government Service Insurance System (GSIS), and shall be granted for a period not exceeding one (1) year.

On January 22, 1991, petitioner's second motion for reconsideration was denied in its CSC Resolution No. 91-101.

Hence, the instant petition for review on certiorari alleging that the Civil Service Commission committed a grave abuse of discretion when it granted the extension of petitioner's service as Registrar of Deeds of Malabon, Metro Manila, for a period of only one (1) year pursuant to CSC Memorandum Circular No. 27, Series of 1990, instead of three (3) years and three (3) months to complete the 15-year service requirement for his retirement with full benefits as provided under Section 11, par. (b) of Presidential Degree No. 1146, otherwise known as the Revised Government Service Insurance Act of 1977.

Petitioner contends that reliance of the Commission on par. (1) of Memorandum Circular No. 27 allowing an extension of service of a compulsory retiree for a period not exceeding one (1) year is both erroneous and contrary to the "benevolent and munificent intentions" of Section 11 of P.D. 1146. Petitioner points out that par. (b), Section 11 of P.D. No. 1146 does not limit nor specify the maximum number of years the retiree may avail of to complete the 15 years of service.

The Solicitor-General agrees with petitioner Cena. He argues that the questioned provision being generally worded, Section 11 par.

(b), P.D. 1146 has general application, thus respondent CSC has no authority to limit through CSC Memorandum Circular No. 27 the privilege under said section to government employees who lack just one year to complete the 15-year service requirement.

The Civil Service Commission, however, contends that since public respondent CSC is the central personnel agency of the government, it is vested with the power and authority, among others, to grant or allow extension of service beyond retirement age pursuant to Section 14 par. (14), Chapter 3, Subtitle A, Title I, Book V of Executive Order No. 292 (Administrative Code of 1987). In interpreting Section 11 par. (b) of P.D. 1146, public respondent CSC contends that the phrase "Provided, That if he has less than fifteen years of service, he shall be allowed to continue in the service to complete the fifteen years", is qualified by the clause: "Unless the service is extended by appropriate authorities," which means that the extension of service must be first authorized by the Commission, as the appropriate authority referred to in Section 11, par. (b), P.D. 1146, before the service of a compulsory retiree (one who has already reached age of 65 years with at least 15 years of service) can be extended.

We grant the petition.

Section 12, par. (14), Chapter 3, Subtitle A, Title I, Book V of the Administrative Code of 1987 (November 24, 1987) cannot be interpreted to authorize the Civil Service Commission to limit to only one (1) year the extension of service of an employee who has reached the compulsory retirement age of 65 without having completed 15 years of service, when said limitation his no relation to or connection with the provision of the law supposed to be carried into effect.

Section 12, par. (14), Chapter 3, Subtitle A, Title I, Book V of the Administrative Code of 1987 provides thus:

Sec. 12. Powers and Functions. The Commission shall have the following powers and functions:

xxx xxx xxx

(14) Take appropriate action on all appointments and other personnel matters in the Civil Service including extension of service beyond retirement age;

As a law of general application, the Administrative Code of 1987 cannot authorize the modification of an express provision of a special law (Revised Government Service Insurance of 1977). Otherwise, the intent and purpose of the provisions on retirement and pension of the Revised Government Service Insurance Act of 1977 (P.D. 1146) would be rendered nugatory and meaningless.

Section 11 paragraph (b) of the Revised Government Service Insurance Act of 1977 expressly provides, thus:

Sec. 11. Conditions for Old-Age Pension. (a) Old-age pension shall be paid to a member who:

xxx xxx xxx

(b) Unless the service is extended by appropriate authorities, retirement shall be compulsory for an employee of sixty-five years of age with at least fifteen years of service: Provided, That if he has less than fifteen years of service, he shall be allowed to continue in the service to complete the fifteen years. (Emphasis supplied)

Being remedial in character, a statute creating a pension or establishing retirement plan should be liberally construed and administered in favor of the persons intended to be benefited thereby. The liberal approach aims to achieve the humanitarian purposes of the law in order that the efficiency, security and well-being of government employees may be enhanced (Bautista

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vs. Auditor General, 104 Phil 428; Ortiz vs. Commission on Elections, G.R. No. L-78957, June 28, 1988, 162 SCRA 812).

The Court stated in Abad Santos vs. Auditor General, 79 Phil. 176, that a pension partakes of the nature of "retained wages" of the retiree for a double purpose: (1) to entice competent men and women to enter the government service, and (2) permit them to retire from the service with relative security, not only for those who have retained their vigor, but more so for those who have been incapacitated by illness or accident.

We have applied the liberal approach in interpreting statutes creating pension or establishing retirement plans in cases involving officials of the Judiciary who lacked the age and service requirement for retirement. We see no cogent reason to rule otherwise in the case of ordinary employees of the Executive Branch, as in the case of petitioner Cena, who has reached 65 but opted to avail of the statutory privilege under Section 11 par. (b) of P.D. 1146 to continue in the service to complete the 15-year service requirement in order to avail of old-age pension.

In Re: Application for Gratuity Benefits of Associate Justice Efren I. Plana, Adm. Matter No. 5460, En Banc Resolution, March 24, 1988, the Court, applying the liberal approach, ruled that Justice Plana, who at the time of his courtesy resignation on March 25, 1986 lacked a few months to meet the age requirement for retirement under the law, is entitled to full retirement benefits under R.A. 910 because his accrued leave credits would have entitled him to go on leave until beyond the age requirement for retirement.

The above ruling of the Court was reiterated in Re: Application for Retirement under Rep. Act No. 910 of Associate Justice Ramon B. Britanico of the Intermediate Appellate Court, Adm. Matter No. 6484 Ret., May 15, 1989. By liberally interpreting Section 3 of R.A. 910, as amended, in favor of the persons intended to be benefited by them, the Court also allowed the conversion of the application for disability retirement of Justice Ruperto Martin under said Section 3 of R.A. 910, as amended (10-year lump sum without the lifetime annuity) into an application for voluntary retirement under Section 1

(5-year lump sum with lifetime annuity) eleven years after his disability retirement was approved on January 10, 1978 (In Re: Application for Life Pension under Rep. Act 910. Ruperto G. Martin, applicant, 187 SCRA 477). The ten-year lump sum which he had received was considered by the Court as payment under Section 1 of the five-year lump sum, to which he was entitled, and of his monthly pensions for the next five years.

However, the Court pointed out in Re: Gregorio G. Pineda, Adm. Matter No. 2076-RET., July 13, 1990, and its six (6) companion cases, 187 SCRA 469, that when the Court allows seeming exceptions to fixed rules for certain retired Judges or Justices, there are ample reasons behind each grant of an exception. The crediting of accumulated leaves to make up for lack of required age or length of service is not done indiscriminately. It is always on case to case basis.

There is thus no justifiable reason in not allowing ordinary employees in the Executive Branch on a case to case basis, to continue in the service to complete the 15-year service requirement to avail of the old-age pension under Section 11 of P.D. 1146. By limiting the extension of service to only one (1) year would defeat the beneficial intendment of the retirement provisions of P.D. 1146.

In resolving the question whether or not to allow a compulsory retiree to continue in the service to complete the 15-year service, there must be present an essential factor before an application under Section 11 par. (b) of P.D. 1146 may be granted by the employer or government office concerned. In the case of officials of the Judiciary, the Court allows a making up or compensating for lack of required age or service only if satisfied that the career of the retiree was marked by competence, integrity, and dedication to the public service (Re: Gregorio Pineda, supra). It must be so in the instant case.

It is interesting to note that the phrase "he shall be allowed to continue in the service to complete the fifteen years" found in Section 11 (b) of P.D. 1146 is a reproduction of the phrase in the original text found in Section 12 (e) of Commonwealth Act 186, as amended, otherwise known as the "Government Service

Insurance Act" approved on November 14, 1936. There is nothing in the original text as well as in the revised version which would serve as the basis for providing the allowable extension period to only one (1) year. There is likewise no indication that Section 11 par. (b) of P.D. 1146 contemplates a borderline situation where a compulsory retiree on his 65th birthday has completed more than 14, but less than 15 years of government service., i.e. only a few months short of the 15-year requirement which would enable him to collect an old-age pension.

While it is true that the Administrative Code of 1987 has given the Civil Service Commission the authority "to take appropriate action on all appointments and other personnel matters in the Civil Service including extension of service beyond retirement age", the said provision cannot be extended to embrace matters not covered by the Revised Government Service Insurance Act of 1977 (Sto. Tomas vs. Board of Tax Appeals, 93 Phil. 376, 382, "citing 12 C.J. 845-46). The authority referred to therein is limited only to carrying into effect what the special law, Revised Government Insurance Act of 1977, or any other retirement law being invoked provides. It cannot go beyond the terms and provisions of the basic law.

The Civil Service Commission Memorandum Circular No. 27 being in the nature of an administrative regulation, must be governed by the principle that administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and should be for the sole purpose of carrying into effect its general provisions (People vs. Maceren, G.R. No. L-32166, October 18, 1977, 79 SCRA 450; Teoxon v. Members of the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel v. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350).

The pronouncement of the Court in the case of Augusta Toledo vs. Civil Service Commission, et al., G.R. No. 92646-47, October 4, 1991, squarely applies in the instant case. We declared in the case of Toledo that the rule prohibiting 57-year old persons from employment, reinstatement, or re-employment in the government service provided under

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Section 22, Rule III of the Civil Service Rules on Personnel Actions and Policies (CSRPAP) cannot be accorded validity, because it is entirely a creation of the Civil Service Commission, having no basis in the law itself which it was meant to implement and it cannot be related to or connected with any specific provision of the law which it is meant to carry into effect. The Court, speaking thru Justice Edgardo L. Paras, stated, thus:

The power vested in the Civil Service Commission was to implement the law or put it into effect, not to add to it; to carry the law into effect or execution, not to supply perceived omissions in it. "By its administrative regulations, of course, the law itself can not be extended; said regulations cannot amend an act of Congress." (Teoxon v. Members of the Board of Administrators, Philippine Veterans Administration, 33 SCRA 585, 589 [1970], citing Santos v. Estenzo, 109 Phil. 419 [1960]; see also, Animos v. Philippine Veterans Affairs Office, 174 SCRA 214, 223-224 [1989] in turn citing Teoxon).

The considerations just expounded also conduce to the conclusion of the invalidity of Section 22, Rule III of the CSRPAP. The enactment of said section, relative to 57-year old persons, was also an act of supererogation on the part of the Civil Service Commission since the rule has no relation to or connection with any provision of the law supposed to be carried into effect. The section was an addition to or extension of the law, not merely a mode of carrying it into effect. (Emphasis supplied)

The governing retirement law in the instant case is P.D. 1146 otherwise known as the "Revised Government Service Insurance Act of 1977." The rule on limiting to only one (1) year the extension of service of an employee who has reached the compulsory retirement age of 65 years, but has less than 15

years of service under Civil Service Memorandum Circular No. 27 s. 1990, cannot likewise be accorded validity because it has no relation to or connection with any provision of P.D. 1146 supposed to be carried into effect. The rule was an addition to or extension of the law, not merely a mode of carrying it into effect. The Civil Service Commission has no power to supply perceived omissions in P.D. 1146.

As a matter of fact, We have liberally applied Section 11 par. (b) of P.D. 1146 in two (2) recent cases where We allowed two employees in the Judiciary who have reached the age of 65 to continue in the government service to complete the 15-year service requirement to be entitled to the benefits under P.D. 1146.

In a resolution dated January 23, 1990 in A.M. No. 87-7-1329-MTC, We allowed Mrs. Florentina J. Bocade, Clerk of Court, Municipal Trial Court, Dagami, Leyte, who at the time she reached the age of 65 years on October 16, 1987 had only 10 years of government service, to continue her services until October 10, 1992. Thus, she was given a period of 5 years, to complete the 15-year service requirement to be entitled to the retirement benefits under Section 11 par. (b) of P.D. 1146. The Court observed that Mrs. Bocade is still performing her duties without any adverse complaints from her superior and that she is physically fit for work per report of the Medical Clinic.

The Court, in a resolution dated April 18, 1991, in A.M. No. 91-3-003-SC.-Re: Request for the extension of service of Mrs. Crisanta T. Tiangco, allowed Mrs. Crisanta T. Tiangco, Budget Officer V, Budget Division, Fiscal Management and Budget Office of the Supreme Court to continue her services until February 10, 1995. She was granted a period of 3 years, 10 months and 13 days because she has to her credit only 11 years, 1 month and 17 days of government service at the time she reached the age of 65 years on March 29, 1991 in order that she be entitled to the retirement benefits under P.D. No. 1146.

It is erroneous to apply to petitioner Cena who has rendered 11 years, 9 months and 6 days of government service, Section 12,

par. (b) of P.D. 1146 which provides that "a member who has rendered at least three (3) years but less than 15 years of service at the time of separation shall, . . . upon separation after age sixty, receive a cash equivalent to 100% of his average monthly compensation for every year of service."

The applicable law should be Section 11 par. (b) of P.D. 1146 which allows him to extend his 11 years, 9 months and 6 days to complete the 15-year of service consistent with the beneficial intendment of P.D. 1146 and which right is subject to the discretion of the government office concerned.

Section 12 par. (b) of P.D. 1146 does not apply to the case of herein Cena, because he opted to continue in the service to complete the 15-year service requirement pursuant to Section 11 par. (b) of P.D. 1146. The completion of the 15-year service requirement under Section 11 par. (b) partakes the nature of a privilege given to an employee who has reached the compulsory retirement age of 65 years, but has less than 15 years of service. If said employee opted to avail of said privilege, he is entitled to the benefits of the old-age pension. On the other hand, if the said employee opted to retire upon reaching the compulsory retirement age of 65 years although he has less than 15 years of service, he is entitled to the benefits provided for under Section 12 of P.D. 1146 i.e. a cash equivalent to 100% of his average monthly compensation for every year of service.

The right under Section 11, par. (b) is open to all employees similarly situated, so it does not offend the constitutional guarantee of equal protection of the law. There is nothing absurd or inequitable in rewarding an employee for completion of the 15-year service beyond the retirement age. If he would be better off than the one who has served for 14 years but who is separated from the service at the age of 64, it would be only just and proper as he would have worked for the whole period of 15 years as required by law for entitlement of the old-age pension. Indeed, a longer service should merit a greater reward. Besides, his entitlement to the old-age pension is conditioned upon such completion. Thus, if the service is not completed due to death or incapacity, he would be entitled to the benefit under Section 12,

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par. (b), i.e. cash equivalent to 100% of his average monthly compensation for every year of service.

Finally, in view of the aforesaid right accorded under Section 11, par. (b) of P.D. 1146, petitioner Cena should not be covered by Memorandum Circular No. 65 issued by then Executive Secretary Catalino Macaraig on June 14, 1988. Memorandum Circular No. 65 allowing retention of service for only six (6) months for "extremely meritorious reasons" should apply only to employees or officials who have reached the compulsory retirement age of 65 years but who, at the same time, have completed the 15-year service requirement for retirement purposes. It should not apply to employees or officials who have reached the compulsory retirement age of 65 years, but who opted to avail of the old-age pension under par. (b), Section 11 of P.D. 1146, in which case, they are allowed, at the discretion of the agency concerned, to complete the 15-year service requirement.

ACCORDINGLY, the petition is granted. The Land Registration Authority (LRA) of the Department of Justice has the discretion to allow petitioner Gaudencio Cena to extend his 11 years, 9 months and 6 days of government service to complete the 15-year service so that he may retire with full benefits under Section 11 par. (b) of P.D. 1146.

SO ORDERED.

Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. 104139 December 22, 1992

LYDIA M. PROFETA, petitioner, vs. HON. FRANKLIN M. DRILON, in his capacity as Executive Secretary, Office of the President of the Philippines, respondent.

PADILLA, J.:

This is a petition for review on certiorari assailing a portion of the decision of the Office of the President, dated 23 October 1991, declaring petitioner as compulsorily retired as of 15 October 1991 and the resolution dated 31 January 1992 denying petitioner's motion for reconsideration of said decision.

The antecedents are the following:

Petitioner, Dr. Lydia M. Profeta, served as Executive Dean of the Rizal Technological Colleges from 24 October 1974 to 15 October 1978. From 16 October 1978 to 30 April 1979, petitioner was the appointed Acting President of said College until her promotion to President of the same college on 1 May 1979.

After the 1986 EDSA revolution or on 5 March 1986, petitioner filed her courtesy resignation as President of the Rizal Technological Colleges and the same was accepted on 21 March 1986. A day before the acceptance of her courtesy resignation, petitioner applied for sick leave.

On 4 November 1988, petitioner was appointed Acting President of Eulogio "Amang" Rodriguez Institute of Science and Technology (hereinafter referred to as EARIST) and was thereafter appointed its President on 29 March 1989.

After reaching the age of sixty-five (65) years on 16 June 1989, petitioner inquired from the Government Service Insurance System (GSIS) as to whether she may be allowed to extend her services with the government as President of EARIST beyond the age of sixty-five (65) years, to enable her to avail of the old-age pension retirement benefits under PD 1146 (Revised Government Service Insurance Act of 1977). In answer to her query, petitioner was advised by the GSIS to return to the service until she shall have fulfilled the fifteen (15) years service requirement pursuant of Section 11 of PD 1146, to qualify for the old-age pension retirement plan. The GSIS declared that

petitioner was not yet eligible to retire under PD 1146, as she had not rendered the sufficient number of years of service on the date of her supposed retirement on 16 June 1989 and that her creditable service was only twelve (12) years and two (2) months. As things stood, she could only claim one hundred percent (100%) of her average monthly compensation for every year of creditable service or to a refund of her premium contributions with the GSIS.

1

On 6 October 1989, as recommended by the Department of Education, Culture and Sports (DECS) Secretary and the Board of Trustees of EARIST, President Aquino, through Deputy Executive Secretary Magdangal B. Elma, extended the term of petitioner as President of EARIST until she shall have completed the required fifteen (15) years of service after reaching the age of sixty five (65) years on the date of her normal retirement on 16 June 1989 or for an additional period of two (2) years, seven (7) months and twelve (12) days.

2

In March 1990, the EARIST Faculty and Employees Union filed an administrative complaint against petitioner before the Office of the President, for her alleged irregular appointment and for graft and corrupt practices. In a memorandum, dated 16 August 1990, the Office of the President furnished petitioner a copy of the complaint with a directive to file an answer thereto with the DECS Secretary, who was duly authorized to conduct a formal investigation of the charges against petitioner. Pending investigation of the complaint, petitioner was placed under preventive suspension for a period of ninety (90) days.

3 After

serving the period of suspension, petitioner re-assumed her duties and functions as President of EARIST.

In a letter dated 20 July 1990, DECS Secretary Cario recommended the compulsory retirement of petitioner.

4

For the purpose of investigating the administrative charges against petitioner,

5 an Ad-Hoc Committee was created by

President Aquino on 12 February 1991. The parties filed their respective pleadings and hearings in the case were conducted by the committee.

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Pending resolution of the administrative charges against her, petitioner was detailed with the DECS Central Office pursuant to a memorandum dated 13 February 1991 signed by Deputy Executive Secretary Sarmiento III. Petitioner filed a petition for certiorari, prohibition and mandamus before the Regional Trial Court of Manila, Branch 40, seeking her reinstatement as EARIST President. After trial, said petition was dismissed. On appeal, the Court of Appeals denied the petition for certiorari on 2 April 1991.

6

Petitioner likewise assailed her reassignment with the DECS Central Office, before the Civil Service Commission (CSC). On 30 July 1991, the CSC denied petitioner's complaint. She moved for reconsideration of said resolution but the same was denied on 3 December 1991, which prompted petitioner to file a petition for certiorari before this Court docketed as G.R. No. 103271. On 3 March 1992, this Court dismissed said petition.

After evaluating the evidence presented before the Ad-Hoc Committee, in a decision

7 dated 23 October 1991, the Office of

the President dismissed the administrative complaint against petitioner for lack of substantial evidence. In the same decision, the Office of the President also declared petitioner as compulsory retired from government service as of 15 October 1991, holding that:

... (I)f the aforesaid sick leave of 62 working days (approximately 3 months) were to be added to the respondent's creditable service, together with the period of two (2) weeks which the respondent's counsel admits in his Memorandum the respondent had served as Professorial Lecturer, the respondent should be considered as compulsorily retired as of Oct. 15, 1991, having completed the required 15 years in the service on or about the said date after reaching the age of 65.

Accordingly, the administrative charges against Dr. Lydia M. Profeta for her alleged "irregular appointment and graft and corrupt

practices" are hereby dismissed. However, Dr. Profeta is hereby considered as now compulsorily retired from the service as of October 15, 1991, in accordance with the provisions of Section 11 (b) of Presidential Decree No. 1146, having completed fifteen (15) years in the government service on or about he said date after reaching the age of sixty-five (65) on June 16, 1989. 8

In a letter dated 23 October 1991, petitioner requested the GSIS to determine the exact date of her retirement. On 5 November 1991, petitioner was advised by the GSIS that the exact date of her retirement falls on 14 August 1992.

9

A motion for reconsideration was then filed by petitioner with the Office of the President, assailing the portion of its decision declaring her as compulsorily retired from the service as of 15 October 1991, alleging that the said office has no jurisdiction over the issue of her compulsory retirement from the government service.

In a resolution 10

dated 31 January 1992, petitioner's motion for reconsideration was denied by the Office of the President. In the same resolution, the Office of the President clarified that there was an over extension of petitioner's period of service with the government by failure to reckon with the sixty-two (62) working days during which petitioner went on sick leave (from 20 March to 17 June 1986) and the period of two (2) weeks during which petitioner served as Professorial Lecturer. In considering petitioner as compulsory retired as of 15 October 1991, the Office of the President held that it merely resolved motu proprio to shorten by three-and-a-half (3-1/2) months the extension granted to petitioner to complete the required fifteen (15) years of service for purposes of retirement. It further declared that it is for the President to determine whether or not petitioner could still continue as EARIST President despite her exoneration from the administrative charges filed against her.

Under Presidential Decree No. 1146 (Revised Government Insurance Act of 1977), one of the benefits provided for qualified

members of the GSIS is the old-age pension benefit. A member who has rendered at least fifteen (15) years of service and is at least sixty (60) years old when separated from the service, is entitled to a basic monthly pension for life but for not less than five (5) years. On the other hand, a member who has rendered less than fifteen (15) years of service but with at least three (3) years of service and is sixty (60) years of age when separated from the service is entitled to a cash payment equivalent to one hundred percent (100%) of the average monthly compensation for every year of service.

However, retirement is compulsory for a member who has reached the age of sixty-five (65) years with at least fifteen (15) years of service. If he has less than fifteen (15) years of service, he shall be allowed to continue in the service to complete the fifteen (15) years,

11 to avail of the old-age pension benefit.

To a public servant, a pension is not a gratuity but rather a form of deferred compensation for services performed and his right to it commences to vest upon his entry into the retirement system and becomes an enforceable obligation in court upon fulfillment of all conditions under which it is to be paid. Similarly, retirement benefits receivable by public employees are valuable parts of the consideration for entrance into and continuation in public office or employment. They serve a public purpose and a primary objective in establishing them is to induce competent persons to enter and remain in public employment and render faithful and efficient service while so employed.

12 Retirement laws are

liberally interpreted in favor of the retiree because their intention is to provide for his sustenance and hopefully even comfort, when he no longer has the stamina to continue earning his livelihood.

13 The liberal approach aims to achieve the

humanitarian purposes of the law in order that the efficiency, security and well-being of government employees maybe enhanced.

14

In the case at bar, at the time petitioner reached the compulsory retirement age of sixty-five (65) years, she had rendered less than the required fifteen (15) years of service under Section 11 of P.D. 1146. Thus, to enable her to avail of the old-age pension benefit, she was allowed to continue in the service and her term

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as President of EARIST was extended until she shall have completed the fifteen (15) years service requirement, or for an additional two (2) years, seven (7) months, and twelve (12) days, as determined by the Office of the President.

This period of extended service granted to petitioner was amended by the Office of the President. In resolving the administrative complaint against petitioner, the Office of the President, ruled not only on the issues of alleged irregular appointment of petitioner and of graft and corrupt practices, but went further by, in effect, reducing the period of extension of service granted to petitioner on the ground that the latter had already completed the fifteen (15) years service requirement under P.D. 1146, and declared petitioner as compulsorily retired as of 15 October 1991.

In other words, the extension of service of petitioner was until January 1992. However, the Office of the President made a new computation of petitioner's period of service with the government, the Office of the President included as part of her service the sixty-two (62) days sick leave applied for by petitioner covering the period between 20 March to 17 June 1988 and her service as a lecturer of approximately two (2) weeks, or a total of three-and-a-half (3 1/2) months. As a result of this new computation, petitioner's extension of service which was supposed to end in January 1992 was reduced by the Office of the President by three-and-a-half (3 1/2) months or until 15 October 1991.

On the other hand, the computation made by the GSIS as to the exact date of retirement of petitioner fell on 14 August 1992.

15 Thus, the extension of service granted to petitioner by

the Office of the President for two (2) years, seven (7) months and twelve (12) days which brought her services only up to January 1992, would not enable herein petitioner to complete the fifteen (15) years service requirement for purposes of retirement. To allow the Office of the President to shorten the extension of service of petitioner by three-and-a-half (3 1/2) months which consist of petitioner's sick leave and service as lecturer, would further reduce petitioner's service with the government. Such reduction from petitioner's service would

deprive her of the opportunity of availing of the old-age pension plan, based on the computation of the GSIS.

We hold that it is the GSIS which has the original and exclusive jurisdiction to determine whether a member is qualified or not to avail of the old-age pension benefit under P.D. 1146, based on its computation of a member's years of service with the government.

16 The computation of a member's service includes

not only full time but also part time and other services with compensation as may be included under the rules and regulations prescribed by the System.

17

The sixty-two (62) days leave of absence of petitioner between 20 March to 17 June 1986 and her part-time service as a lecturer f approximately two (2) weeks, or a total of three-and-a-half (3 1/2) months is not reflected in her service record. Said period should be considered as part of her service with the government and it is only but proper that her service record be amended to reflect said period of service.

We have observed that the computation made by the GSIS of petitioner's date of retirement failed to take into account the three-and-a-half (3 1/2) months service of petitioner which was not reflected in her service record. If we deduct this unrecorded three-and-a-half (3 1/2) months service of petitioner from 14 August 1992, petitioner is to be considered retired on 30 April 1992.

The order of the Office of the President declaring petitioner as compulsorily retired as of 15 October 1991 defeats the purpose for allowing petitioner to remain in the service until she has completed the fifteen (15) years service requirement. Between the period of 16 October 1991 to 30 April 1992, petitioner should have been allowed to continue in the service to be able to complete the fifteen (15) years service requirement; she was prepared to render services for said period but was not allowed to do so; she should, therefore, the entitled to all her salaries, benefits and other emoluments during said period (16 October 1991 - 30 April 1992). However, petitioner's claim for reinstatement to her former position to enable her to complete the fifteen (15) year service requirement for retirement purposes

is no longer possible, considering that she is deemed to have completed the said service requirement as of 30 April 1992.

WHEREFORE, the portion of the decision of the Office of the President dated 23 October 1991 declaring petitioner as compulsorily retired as of 15 October 1991 is SET ASIDE. Petitioner is hereby declared to have been in the service as President of EARIST from 16 October 1991 until 30 April 1992 and therefore entitled to all salaries, benefits and other emoluments of said office from 16 October 1991 to 30 April 1992. In addition, she is declared as entitled to her old-age pension benefits for having reached age 65 years while in the service with 15 years of service to her credit, subject to her compliance with all applicable regulations and requirements of the GSIS.

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo and Campos, Jr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. 111812 May 31, 1995

DIONISIO M. RABOR, petitioner, vs. CIVIL SERVICE COMMISSION, respondent.

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FELICIANO, J.:

Petitioner Dionisio M