Board of Administrators vs. Bautista

Veterans' pension awards must be given retroactive effect to the date of prior disapproval of the claim where the disapproval was merely a suspension pending completion of supporting papers, pursuant to the doctrine that pension statutes are liberally construed in favor of the pensioner; however, payment of increased pension under amendatory legislation remains subject to the availability of government funds duly appropriated for the purpose.

The Philippine Veterans Administration (formerly the Philippine Veterans Board, now the Philippine Veterans Affairs Office) is a government agency charged with administering laws granting benefits to veterans, widows, orphans, and parents, with power to adopt rules and regulations and pass upon the qualifications of applicants. Republic Act No. 65, known as the Veterans' Bill of Rights, was enacted on September 25, 1946, providing disability pensions for veterans incapacitated due to service-connected illness. The law was progressively amended by R.A. 1362 (June 22, 1955), R.A. 1920 (June 18, 1957), and R.A. 5753 (June 22, 1969), each increasing pension amounts and expanding coverage to the veteran's wife and unmarried minor children. The implementing Board's mandate under Section 6 of R.A. 65 required it to carry out the statute's provisions "in the most expeditious way possible and without unnecessary delay."

Calixto V. Gasilao was a veteran in good standing during World War II who took active participation in the liberation drive against the enemy. Due to his military service, he was rendered disabled, suffering from pulmonary tuberculosis (PTB) which he incurred in line of duty. On July 23, 1955, he filed a claim (Claim No. Dis-12336) for disability pension under Section 9 of Republic Act No. 65 with the Philippine Veterans Board, alleging service-connected PTB. The claim was disapproved by the Board on December 18, 1955 due to his failure to complete his supporting papers and submit evidence to establish his service-connected illness.

Meanwhile, the pension laws governing Gasilao's claim were progressively amended. Republic Act No. 1362, approved on June 22, 1955, included an additional P10.00 per month for each unmarried minor child below 18 of the veteran and was implemented on July 1, 1955. Republic Act No. 1920, approved on June 18, 1957, further amended Section 9 of R.A. 65, increasing the life pension to P100.00 per month while maintaining the P10.00 per month for each unmarried minor child. Republic Act No. 5753, approved on June 22, 1969, increased the life pension to P200.00 per month and granted P30.00 per month for the wife and P30.00 per month each for unmarried minor children below 18.

On August 8, 1968, after Gasilao was able to complete his supporting papers and upon due investigation and processing, the Board of Administrators found his disability to be 100% and awarded him the full benefits under Section 9 of R.A. 65 — a pension of P100.00 per month with an additional P10.00 per month for each of his unmarried minor children pursuant to R.A. 1920. Gasilao requested that his claim be made retroactive to the date when his original application was filed or disapproved in 1955, but the respondents did not act on his request. Under R.A. 5753, his monthly pension was increased only on January 15, 1971, and by only 25% of the increases provided by law, because it was only on that date that funds were released for the purpose, and the amount released was sufficient to cover only 25% of the increase. On January 15, 1972, more funds were released to implement R.A. 5753 fully and allow payment in full of the benefits thereunder from that date.

Gasilao thereafter filed a complaint for mandamus in the Court of First Instance of Manila, Branch III (Civil Case No. 90450), seeking payment of pension differentials covering the periods from 1955 to 1971. The parties submitted a stipulation of facts on September 24, 1973, admitting, among other things, that Gasilao was a veteran rendered disabled due to military service and that his claim was disapproved on December 18, 1955 for failure to complete supporting papers. The lower court rendered judgment on October 25, 1973 in favor of Gasilao, ordering the Board to make his pension effective as of December 18, 1955 and to pay the various differentials claimed through December 31, 1971.

• Retroactivity: Petitioner maintained that the pension award should commence from the date of approval of the application on August 8, 1968, not from the date of prior disapproval on December 18, 1955, since the disapproval was due to Gasilao's own failure to complete supporting papers and submit evidence of his service-connected illness. Petitioner argued that the facts of the Begosa case — where the disapproval was erroneous — were not similar to those at bar, and that Section 15 of R.A. 65 impliedly requires Board approval before a claimant could receive pension.
• Prescription: Petitioner contended that since the action was filed in the lower court on April 13, 1973 seeking payment of claims that had accrued more than ten years prior to that date, the same should have been disallowed as prescribed under Article 1144 of the Civil Code.
• Availability of Funds: Petitioner argued that payment of increased pension under R.A. 5753 could not be ordered where there was no actual release of funds for the purpose, even though the law itself expressly provided for an appropriation.

• Retroactivity of Pension Award: Whether Gasilao's pension benefits should retroact to the date of prior disapproval of his claim on December 18, 1955, or commence only from the date of approval on August 8, 1968.
• Prescription: Whether Gasilao's claim for pension benefits had prescribed under Article 1144 of the Civil Code.
• Availability of Funds: Whether payment of increased pension under R.A. 5753 could be ordered despite the absence of actual release of funds for the purpose.

• Retroactivity of Pension Award: Yes. Pension benefits should retroact to December 18, 1955, the date of prior disapproval, applying the liberal construction doctrine for veterans' pension laws and the ruling in Begosa vs. Chairman, Philippine Veterans Administration.
• Prescription: No. The claim had not prescribed. The ten-year prescriptive period was counted from the passage of R.A. 65 on September 25, 1946, and the filing of the application on July 23, 1955 effectively interrupted the prescriptive period.
• Availability of Funds: Payment of differentials under R.A. 5753 is subject to the availability of government funds appropriated for the purpose, following the ruling in Board of Administrators vs. Hon. Agcaoili.

• Retroactivity of Pension Award: Republic Act No. 65 is a veteran pension law that must be liberally construed in favor of those entitled to benefits, as its purpose is to compensate men who suffered in service and those incapacitated due to service-connected illness — a governmental expression of gratitude to those who rendered service for the country. While the law does not explicitly provide for the effectivity of pension awards, Section 6 mandates the Board to carry out the statute's provisions "to insure the speedy and honest fulfillment of its aims and purposes." The stipulation of facts admitted in paragraph 1 that Gasilao was a veteran rendered disabled due to military service, from which it can reasonably be deduced that the action on his claim was merely suspended pending completion of required supporting papers and evidence. Hence, the ruling in Begosa — where the award was made retroactive to the date of prior erroneous disapproval — still holds. If pension awards were made effective only upon approval, dependent on the Board's discretion, the noble and humanitarian purposes of the law could be thwarted through inaction, as demonstrated by the twelve-year delay in Gasilao's case (from December 1955 to August 8, 1968).
• Prescription: The obligation of the government to pay pension was created by law (Section 9, R.A. 65), falling under Article 1144(2) of the Civil Code. The ten-year prescriptive period should be counted from the date of passage of the law on September 25, 1946, since it is only from that date that Gasilao could have filed his application. The actual filing on July 23, 1955 was clearly within and effectively interrupted the prescriptive period. The date of commencement of the court action is not the reckoning point, as Gasilao first sought to claim his benefits when he filed his application with the Philippine Veterans Board, not when he filed the mandamus action. As stated in Vda. de Nator vs. C.I.R., "the basis of prescription is the unwarranted failure to bring the matter to the attention of those who are by law authorized to take cognizance thereof." Nothing in the record shows intentional abandonment of the claim after disapproval; it is logical to presume that Gasilao proceeded to work for completion of the Board's requirements, as evidenced by the eventual approval on August 8, 1968.
• Availability of Funds: Following the ruling in Board of Administrators vs. Hon. Agcaoili, the Court refrained from ordering payment of increased pension where the Government had not provided the necessary funds to pay all valid claims. While the entitlement to increased pension is established as a matter of law, actual payment must remain subject to the availability of government funds duly set aside for the purpose. The differentials in pension to which Gasilao, his wife, and unmarried minor children are entitled for the period from June 22, 1969 to January 14, 1972 by virtue of R.A. 5753 were declared subject to the availability of government funds appropriated for the purpose.

• Liberal Construction of Pension Statutes — Pension statutes are liberally construed in favor of those entitled to pension, as they constitute a governmental expression of gratitude to and recognition of those who rendered service for the country, especially during times of war or revolution. Courts tend to favor the pensioner, but such constructional preference must be considered with other guides to interpretation, and construction must depend on the particular language of the law. Applied in this case to hold that pension benefits should retroact to the date of prior disapproval rather than only from the date of approval, notwithstanding that the disapproval was due to the claimant's failure to complete supporting papers.
• Retroactivity of Pension Awards to Date of Prior Disapproval — Where a veteran's claim was disapproved not on the merits but due to incomplete supporting papers, and the stipulation of facts admits that the veteran was disabled due to military service, the disapproval is deemed a mere suspension pending completion of requirements. The pension award should retroact to the date of such prior disapproval, as making awards effective only upon approval — dependent on the Board's discretion — could allow abuse through inaction and defeat the humanitarian purposes of the law.
• Prescription of Claims Created by Law — Where the obligation to pay pension is created by law, the ten-year prescriptive period under Article 1144 of the Civil Code is counted from the date of passage of the law, not from the date of filing of the court action. The filing of the application with the administrative agency effectively interrupts the prescriptive period, as prescription is based on the unwarranted failure to bring the matter to the attention of those authorized by law to take cognizance thereof.
• Payment of Pension Subject to Availability of Funds — Even where a statute expressly provides an appropriation for pension increases, actual payment of increased pension remains subject to the availability of government funds duly set aside for the purpose. The Court will define the entitlement as a matter of law but refrain from ordering payment where the Government has not provided the necessary funds to pay all valid claims duly approved under the authority of the statute.

• "A veteran pension law is, therefore, a governmental expression of gratitude to and recognition of those who rendered service for the country, especially during times of war or revolution, by extending to them regular monetary aid. For this reason, it is the general rule that a liberal construction is given to pension statutes in favor of those entitled to pension." — This passage articulates the doctrinal basis for liberal construction of veterans' pension laws and is the canonical formulation relied upon in the decision.
• "It is not the date of the commencement of the action in the lower Court which should be reckoned with, for it was not on said date that private respondent first sought to claim his pension benefits but on July 23, 1955 when he filed his application with the defunct Philippine Veterans Board." — This defines the reckoning point for prescription of claims created by law, establishing that filing with the administrative agency — not the court — interrupts the prescriptive period.
• "if the pension awards are made effective only upon approval of the corresponding application which would be dependent on the discretion of the Board of Administrators which as noted above had been abused through inaction extending to nine years, even to twelve years, the noble and humanitarian purposes for which the law had enacted could easily be thwarted or defeated." — This states the ratio decidendi for retroactivity of pension awards, explaining why deferring effectivity to the date of approval would undermine the statute's purpose.

• Begosa vs. Chairman, Philippine Veterans Administration, L-25616, April 30, 1970, 32 SCRA 466 — Controlling precedent followed. The Court ruled that a pension award should retroact to the date of prior erroneous disapproval of the claim. Applied in this case despite factual differences — there the disapproval was erroneous, here it was due to incomplete papers — because the stipulation of facts admitting service-connected disability rendered the disapproval a mere suspension pending completion of requirements.
• Board of Administrators, Philippine Veterans Administration vs. Hon. Agcaoili, Et Al., L-38129, July 23, 1974, 58 SCRA 72 — Controlling precedent followed. The Court held that payment of increased pension under R.A. 5753 is subject to the availability of government funds and refrained from ordering payment where the Government had not provided the necessary funds. Applied directly to declare Gasilao's differentials under R.A. 5753 subject to fund availability.
• Vda. de Nator vs. C.I.R., L-16671, March 30, 1962, 4 SCRA 727 — Cited for the principle that "the basis of prescription is the unwarranted failure to bring the matter to the attention of those who are by law authorized to take cognizance thereof," supporting the conclusion that filing the application with the Veterans Board interrupted the prescriptive period.

• Section 9, Republic Act No. 65 (Veterans' Bill of Rights), as amended by R.A. 1362, R.A. 1920, and R.A. 5753 — Provides for disability pension for veterans incapacitated due to service-connected illness. The obligation to pay pension was held to be created by this provision, bringing it within Article 1144(2) of the Civil Code. Successive amendments increased the pension amounts and expanded coverage to the veteran's wife and unmarried minor children.
• Section 6, Republic Act No. 65 — Mandates the Board to pass upon the merits and qualifications of applicants "pursuant to such rules as it may adopt to insure the speedy and honest fulfillment of its aims and purposes." Cited as the statutory basis for requiring expeditious implementation without unnecessary delay, supporting the retroactivity ruling.
• Section 15, Republic Act No. 65 — Requires filing of application with the Board. Petitioner cited this to argue that pension should commence only upon Board approval, but the Court rejected this interpretation as inconsistent with the spirit and intent of the law.
• Article 1144, Civil Code — Provides a ten-year prescriptive period for actions upon an obligation created by law. Applied to determine that the prescriptive period should be counted from the passage of R.A. 65 on September 25, 1946, and that Gasilao's filing of his application on July 23, 1955 effectively interrupted the period.
• Republic Act No. 5753 — Amended Section 9 of R.A. 65, increasing the basic pension to P200.00 per month and granting additional P30.00 per month for the wife and each unmarried minor child. Payment of differentials under this law was declared subject to the availability of government funds appropriated for the purpose.

Teehankee (Chairman), Makasiar, Fernandez, Melencio-Herrera, and Plana, JJ., concur.