Batungbakal vs. National Development Company

A civil service employee appointed by the Auditor General in an office under his control may not be suspended or dismissed without cause; once exonerated, reinstatement is a ministerial duty enforceable by mandamus, and payment of back salary is incidental to reinstatement.

Pedro Batungbakal worked in the office of the Comptroller of the NDC, a government-owned corporation in which the Government owned the majority stock, while the Auditor General exercised control over that office under Section 548 of the Administrative Code. The NDC paid the salaries of the Comptroller's staff, but the Auditor General was ex officio auditor of such corporations and was authorized to appoint his representative and the personnel assisting him. The dispute required determining whether Batungbakal was a civil service employee protected against removal without cause, despite the NDC's post-reorganization practice of appointing personnel in the Comptroller's office.

On February 14, 1939, Pedro Batungbakal was appointed by the Auditor General as cash and property examiner in the office of the Comptroller of the NDC. Shortly before the Pacific, the position of cash and property examiner was divided into cash examiner and property examiner, with Batungbakal retaining the position of property examiner. Around October 1944 he went on leave. When the NDC was reopened in March 1945, Batungbakal and some other employees in the Comptroller's office were recalled to duty. The Comptroller was under the supervision of the Auditor General, but his salary and those of his personnel were paid by the NDC. Since the reorganization of the NDC, it became the practice that only the Comptroller was appointed by the Auditor General with the approval of the Board of Directors of the Company, while the personnel in his office were appointed by the company itself.

On August 24, 1945, Batungbakal was appointed by the Chairman of the Board of Directors and Acting General Manager of the NDC as property examiner in said company with a salary of P100 a month. He was promoted in salary to P2,040 a year effective April 1, 1946, in the same position of property examiner, by appointment dated March 30, 1946, signed by the Acting General Manager of the NDC. On December 31, 1946, Batungbakal was suspended from office as property examiner by the Investigating Committee created by Administrative Order No. 39 of the President of the Philippines. On April 17, 1947, he received from the officer in charge of the NDC notice of his dismissal. The notice stated that, pursuant to the instruction of the Chief of the Executive Office, he was found to have committed gross negligence in the performance of his duties to the detriment of the Company, and that the irregularities committed by him constituted acts and omissions which made possible the omission of irregularities in the disposal of yarns either in the names of fictitious buyers or through dummies, contrary to the policy of the Company.

On May 28, 1947, Batungbakal filed a petition for reconsideration with the Office of the President; the matter was referred to Sixto de la Costa as Chairman of the Investigating Committee. On December 4, 1948, the Investigating Committee of the NDC under the Chairmanship of de la Costa submitted to the President of the Philippines through the Secretary of Justice its report, which ended by reconsidering its previous findings, declaring that Batungbakal and de la Cruz had not committed negligence in the discharge of their duties, and recommending their reinstatement to the service of the NDC. On August 17, 1949, the Secretary of Justice forwarded the report and other pertinent papers to the Office of the President with the recommendation that Batungbakal be reinstated with a warning that, as representative of the Comptroller, he was bound by the rules, regulations, and instructions issued by the Management of the NDC, and that his failure thereafter to comply would be more severely dealt with. On September 5, 1949, the Office of the President referred the matter to the General Manager of the NDC through the Chairman of the Control Committee, Government Enterprise Council (GEC), for appropriate action. On October 14, 1949, the Executive Vice-Chairman of the Control Committee of the GEC forwarded the papers to the General Manager of the NDC, concurring in the view of the Secretary of Justice exonerating Batungbakal and de la Cruz of the charge of gross negligence.

On October 27, 1949, the Technical Assistant (Legal Credit and Collection) of the NDC wrote to the Auditor General through the Auditor of the NDC, requesting his opinion on whether Batungbakal was entitled to backpay from the date of his suspension to the date of his reinstatement. The Auditor of the NDC, in his first indorsement to the Auditor General, said that reinstatement to the position of property examiner was no longer feasible because there was no vacancy, but that no objection could be interposed to Batungbakal's reinstatement in the NDC provided it was not to any position under the jurisdiction of the General Auditing Office; he believed Batungbakal was not entitled to salary from the time of his suspension or dismissal to the date of his reinstatement or appointment to a different position. The Auditor General later returned the papers, recommending that a new position be created in the NDC to which Batungbakal could be reinstated, provided it would not be in the Auditing Department, and stating that his office would offer no objection to payment of salary from the date of suspension on December 31, 1946 to the date of dismissal on April 17, 1947. On April 15, 1950, the Secretary of the Board of Directors of the NDC wrote to Batungbakal informing him that the Board, in its meeting of April 12, 1950, had authorized payment of his salary during the period of suspension from December 31, 1946 to the date of dismissal on April 17, 1947, as recommended by the Auditor General, and had authorized his reappointment to any suitable position in the NDC. His backpay from December 31, 1946 up to April 17, 1947 amounting to P689 was applied to the sum of P1,392.42 (should be P1,394.42), leaving an unpaid balance of P705.42. On August 15, 1950, the Acting Secretary of Economic Coordination approved the Board's action reiterating that it had no objection to Batungbakal's re-employment to any suitable position in the NDC, but stating that it was not possible to re-employ him at that time because his former item was already occupied by someone else and there were no vacant items to which he could be appointed. On October 2, 1950, Batungbakal wrote to the Chairman of the Board of Directors of the NDC requesting his reinstatement and payment of all his salary up to the date of his reinstatement. The Board, in its meeting of October 8, 1950, authorized his reinstatement as previously approved on April 12, 1950, provided that he renounce his right to claim payment of his back salary, and authorized the Acting General Manager to look for a suitable position for him in the National Shipyard & Graving Dock Department. On November 4, 1950, Batungbakal through counsel informed the General Manager of the NDC that he declined to accept any position other than the one formerly occupied by him and requested that his back salary be paid as soon as possible.

In its meeting of November 8, 1950, the Board of Directors of the NDC approved Batungbakal's request for payment of his salary amounting to P7,820 as of October 31, 1950, and appropriated the necessary sum, subject to the final approval of the GEC and the Auditor General, provided Batungbakal relinquished his right to reinstatement in the service of the NDC. On November 17, 1950, the Acting General Manager of the NDC wrote to the Secretary of Economic Coordination transmitting excerpts from the minutes of the meeting for final approval and informed Batungbakal's counsel of his action. On December 29, 1950, the Chief Law Officer, in a memorandum to the Auditor General, opined that the Board's action authorizing payment of back salaries was legally justified because Batungbakal had not been suspended and dismissed for cause and, as an employee of the NDC, which is an agency of the Government, could not be removed except for cause. The Senior Attorney of the same office, in another memorandum, referred to efforts toward a compromise and expressed the belief that full back salary could legally be paid because it covered only three years, citing the precedent of Severo Yap, former Superintendent of Prisons, who was paid back salary for about five years during his suspension, and that the office may not insist on further compromise. On February 7, 1951, the Auditor General, by his 2nd indorsement, returned to the Administrator of Economic Coordination the Board resolution authorizing payment of P7,820, stating that his office found no specific provision of law under which payment could be authorized; that Section 260 of the Revised Administrative Code, which authorizes payment to a suspended employee of full salary upon exoneration or reinstatement, could not apply because Batungbakal was not merely suspended but also dismissed; and that, in view of the precarious financial condition of the NDC, he authorized payment of salary corresponding only to the period from December 31, 1946 to December 31, 1947. The Administrator of Economic Coordination then returned the resolution to the General Manager of the NDC, stating that his office had no objection to payment of Batungbakal's salary from December 31, 1946 to December 31, 1947.

Batungbakal filed a case in the Court of First Instance of Manila against the NDC and Manuel Agregado as Auditor General, praying that the officer in charge of the NDC be ordered to reinstate him without condition, that the Auditor General be ordered to approve his claim for back salary from December 31, 1946 up to his reinstatement and the NDC be ordered to pay it at P2,040 per annum, and that the defendants be ordered to pay P5,000 in damages and attorney's fees and the costs. The defendants filed answers. The Auditor General raised a preliminary issue that the CFI had no jurisdiction over the action against him because his decisions are appealable only to the President or the SC, depending on whether the aggrieved party is a government officer or a private person, citing Article XI, section 3, of the Constitution, Commonwealth Act No. 327, and Rule 45; he also claimed that his right and duty to appoint personnel and approve accounts was discretionary and could not be limited or compelled by mandamus. After trial, the CFI Manila, presided by Judge Fidel Ibañez, found that Batungbakal had been appointed by the Auditor General, suspended and dismissed, and later exonerated on reinvestigation, and rendered the decision now on appeal.

• Jurisdiction over the Auditor General: Appellants argued that the CFI had no jurisdiction over the action against the Auditor General because his decisions are appealable only to the President or the SC, depending on whether the aggrieved party is a government officer or a private person, citing Article XI, section 3, of the Constitution, Commonwealth Act No. 327, and Rule 45.
• Discretion to Appoint and Approve Claims: Appellants argued that the Auditor General had full discretion to appoint or not appoint personnel in the Comptroller's office and to grant or withhold back salaries, being vested by the Constitution and Section 584 of the Administrative Code with jurisdiction over Government accounts and claims; mandamus could not control that discretion.
• No Specific Law for Back Salary: Appellants argued that no specific provision of law authorized payment of Batungbakal's back salary, and Section 260 of the Revised Administrative Code did not apply because he was not merely suspended but dismissed.
• Failure to Appeal from Auditor General's Decision: Appellants argued that Batungbakal did not appeal from the Auditor General's decision denying his claim, so that decision became final and conclusive upon the executive branches under Article XI, section 3, of the Constitution, the Jones Law, section 255 of the Revised Administrative Code, Commonwealth Act No. 327, section 2, and Rule 45.
• Rights of the Present Incumbent: Appellants argued that reinstating Batungbakal would amount to removing the present incumbent without cause.

• Civil Service Status: Whether Batungbakal was a civil service employee appointed by the Auditor General and protected against removal without cause, despite the NDC's practice of appointing personnel in the Comptroller's office.
• Legality of Suspension and Dismissal: Whether Batungbakal's suspension and dismissal were illegal for being without cause after the reinvestigation exonerated him.
• Reinstatement by Mandamus: Whether reinstatement to his former position was a ministerial duty enforceable by mandamus despite the Auditor General's claim of discretion and the absence of a vacancy.
• Back Salary: Whether Batungbakal was entitled to back salary from the date of suspension to reinstatement, despite the Auditor General's claim of discretion and the lack of a specific law.
• Failure to Appeal from Auditor General's Decision: Whether Batungbakal's failure to appeal from the Auditor General's decision barred judicial redress.
• Rights of the Present Incumbent: Whether reinstatement would amount to removing the present incumbent without cause.

• Civil Service Status: Yes. Batungbakal was a civil service employee because he was appointed by the Auditor General under Section 548 of the Administrative Code as ex officio auditor of the NDC; the NDC's practice of appointing Comptroller personnel could not override the law.
• Legality of Suspension and Dismissal: Yes, illegal. His suspension and dismissal were without cause, as shown by his exoneration on reinvestigation, violating Article XII, section 4, of the Constitution and Section 694 of the Administrative Code.
• Reinstatement by Mandamus: Yes. Once he proved illegal suspension and dismissal, reinstatement became a plain ministerial duty of the Auditor General enforceable by mandamus; discretion could not defeat it.
• Back Salary: Yes. Payment of back salary is incidental to and follows reinstatement, supported by analogy to Section 260, paragraph 1, of the Revised Administrative Code.
• Failure to Appeal from Auditor General's Decision: No. The Auditor General's decision is final and conclusive upon the executive branches but not upon the judiciary; failure to appeal did not bar court redress.
• Rights of the Present Incumbent: No. Because Batungbakal's position never legally became vacant, the present incumbent's tenure was temporary and precarious; reinstatement did not amount to an unconstitutional removal without cause.

• Civil Service Status: The SC first ascertained Batungbakal's status. Although the NDC paid his salary, he was appointed by the Auditor General, who under Section 548 of the Administrative Code is ex officio auditor of corporations like the NDC where the Government owns the majority stock. As ex officio auditor, the Auditor General could appoint his representative and fix the salary and number of personnel assisting him. Batungbakal was in the Comptroller's office under the Auditor General's control. The post-reorganization practice of the NDC appointing Comptroller personnel could not override or supplant the law or affect their status. The Secretary of Justice, in an opinion requested by the Auditor General, and the Commissioner of Civil Service shared the view that personnel of the Auditor General in controlled corporations like Cebu Portland Cement Co., which had the same status as the NDC, were not corporate employees but agents of the Government and embraced in the civil service.
• Legality of Suspension and Dismissal: Article XII, section 4, of the Constitution provides that no officer or employee in the civil service shall be removed or suspended except for cause as provided by law; Section 694 of the Administrative Code has a similar provision. The SC had held in Lacson vs. Romero and De los Santos vs. Mallari that a civil service official may not be removed from office except for cause. Batungbakal was suspended and later dismissed without cause, as shown by the reinvestigation that exonerated him and found him guiltless of gross negligence, and by the investigating committee's recommendation for reinstatement. His suspension and removal were illegal and violated both the Administrative Code and the Constitution.
• Reinstatement by Mandamus: The Auditor General claimed full discretion to appoint personnel and grant or withhold back salaries. The SC rejected this because it would allow an arbitrary Auditor General to dismiss an employee without cause, appoint another, and leave the dismissed employee helpless since reinstatement and back salary would be within discretion not controllable by mandamus and no vacancy would exist. When a citizen establishes a right in court after due hearing, that right is paramount and must be enforced; technicalities must give way. Having proven suspension and dismissal without cause contrary to the Constitution, Batungbakal's reinstatement became a plain ministerial duty of the Auditor General, enforceable by mandamus. There was no room for discretion; the Auditor General was being ordered to redress a grievance, not to perform a discretionary act.
• Back Salary: The SC held that payment of back salary is merely incidental to and follows reinstatement. It also found a parallel and analogy in Section 260, paragraph 1, of the Revised Administrative Code, which provides for payment of back salary upon reinstatement. The SC reasoned that restoring the office and including payment of salary during the illegal suspension and dismissal was not unreasonable or unjust. The CFI's award of back salary at P2,040 per annum from suspension to reinstatement, less amounts owed the NDC, was affirmed.
• Failure to Appeal from Auditor General's Decision: The Auditor General argued that Batungbakal's failure to appeal from his decision made it final and conclusive upon the executive branches. The SC rejected this, citing Ynchausti & Co. vs. Wright, 47 Phil. 866, which held that failure to appeal from the Auditor's decision does not affect the claimant's right of redress in the courts. Although the Organic Act provides that the Auditor's decision shall be final and conclusive upon the executive branches, it does not make it final and conclusive upon the Legislature or the Judiciary.
• Rights of the Present Incumbent: The Auditor General argued that reinstatement would remove the present incumbent without cause. The SC held that because Batungbakal was illegally suspended and dismissed, legally speaking his position never became vacant, so there was no vacancy to which the present incumbent could be permanently appointed. The incumbent's occupancy or tenure was temporary and precarious and did not fall within the constitutional prohibition. Even assuming the incumbent's tenure was permanent and protected, making him leave to give way to Batungbakal's superior right could be considered removal for cause, similar to quo warranto where an incumbent is ousted by court order in favor of the successful party.

• Civil Service Security of Tenure — No officer or employee in the civil service shall be removed or suspended except for cause as provided by law. The SC applied this to Batungbakal, holding that as a civil service employee appointed by the Auditor General, his suspension and dismissal without cause were illegal.
• Ministerial Duty to Reinstate and Mandamus — Once a civil service employee is exonerated and shown to have been illegally suspended or dismissed, reinstatement becomes a ministerial duty enforceable by mandamus; the appointing authority's discretion cannot defeat that duty. The SC applied this against the Auditor General's claim of discretion.
• Back Salary Incidental to Reinstatement — Payment of back salary follows reinstatement as an incident of the illegal suspension or dismissal, supported by analogy to Section 260, paragraph 1, of the Revised Administrative Code. The SC applied this to affirm the award of back salary.
• Auditor General's Decision Not Final Against the Judiciary — The Auditor General's decision is final and conclusive upon the executive branches but not upon the Legislature or the Judiciary; failure to appeal from it does not bar a claimant's right of redress in court. The SC applied this in rejecting the finality argument.
• No Vacancy in Illegal Dismissal — Legally, the position of an illegally dismissed employee never became vacant, so an incumbent appointed in his place holds only a temporary and precarious tenure. The SC applied this in rejecting the argument that reinstatement would remove the incumbent without cause.
• Practice Cannot Override Law — An administrative practice cannot override or supplant the legal provisions governing civil service status. The SC applied this to the NDC's practice of appointing personnel in the Comptroller's office.

• "When a citizen after due hearing establishes his right in court, said right is paramount and must be given force and effect. The way must be cleared for its enforcement, and technicalities in procedure, judicial as well as administrative, must give away." — The SC used this to reject the Auditor General's discretion and technical objections, holding that a judicially established right must be enforced.
• "Having proven that he (the plaintiff) had been suspended and dismissed without cause, contrary to the express provision of the Constitution, his reinstatement becomes a plain ministerial duty of the Auditor General, a duty whose performance may be controlled and enjoined by mandamus." — This is the core ruling that reinstatement is ministerial and enforceable by mandamus after proof of illegal suspension and dismissal.
• "Inasmuch as Batungbakal was illegally suspended and dismissed, legally speaking, his position never became vacant, hence there was no vacancy to which the present incumbent could be permanently appointed." — The SC used this to reject the argument that reinstatement would amount to removing the present incumbent without cause.
• "the failure to appeal from the Auditor's decision does not affect claimant's right of redress in the Courts" — The SC relied on this to hold that the Auditor General's decision did not bar Batungbakal from seeking judicial relief.

• Lacson vs. Romero, G.R. No. L-3081, 47 Off. Gaz., 1778 — Followed; held that a civil service official may not be removed from office except for cause.
• De los Santos vs. Mallari, G.R. No. L-3881, August 31, 1952 — Followed; held that a civil service official may not be removed from office except for cause.
• Ynchausti & Co. vs. Wright, 47 Phil. 866 — Followed; held that failure to appeal from the Auditor's decision does not affect the claimant's right of redress in the courts, and that the Auditor's decision is not final and conclusive upon the Judiciary.

• Article XII, section 4, Constitution — Provides that no officer or employee in the civil service shall be removed or suspended except for cause as provided by law. The SC applied this to hold Batungbakal's suspension and dismissal illegal.
• Section 694, Administrative Code — Contains a similar security-of-tenure provision for civil service employees. The SC applied it together with the Constitution.
• Section 548, Administrative Code — Makes the Auditor General ex officio auditor of corporations like the NDC where the Government owns the majority stock and authorizes him to appoint his representative and personnel. The SC used this to establish Batungbakal's civil service status.
• Section 584, Administrative Code — Cited by the Auditor General as vesting jurisdiction over Government accounts and claims. The SC rejected the claim that this gave him discretion to withhold back salaries.
• Section 260, paragraph 1, Revised Administrative Code — Provides for payment of back salary upon reinstatement. The SC used it by analogy to support the award of back salary as incidental to reinstatement.
• Article XI, section 3, Constitution — Cited by the Auditor General on the finality of his decisions. The SC held that the Auditor General's decision is not final and conclusive upon the Judiciary.
• Commonwealth Act No. 327, section 2 — Cited by the Auditor General on appeal from his decisions. The SC rejected its use to bar judicial redress.
• Rule 45, Rules of Court — Cited by the Auditor General on appeal from his decisions. The SC rejected its use to bar judicial redress.
• Jones Law, section 255, Revised Administrative Code — Cited by the Auditor General on the finality of his decisions. The SC rejected its use to bar judicial redress.