Philippine National Bank vs. Giovanni Palma et al.

Under Section 12 of R.A. No. 6758, additional compensation not integrated into the standardized salary rates shall continue to be granted only to employees who were incumbents and were actually receiving such benefits as of July 1, 1989; employees hired after that date have no legal right to the same, and mandamus will not lie to compel their payment.

Republic Act No. 6758, the Salary Standardization Law, took effect on July 1, 1989, and by its Section 12 consolidated all allowances into standardized salary rates except representation and transportation allowances, clothing and laundry allowances, subsistence allowances of marine officers and crew on board government vessels and hospital personnel stationed abroad, and such other additional compensation as the Department of Budget and Management might determine. The DBM issued Corporate Compensation Circular No. 10 to implement the statute; Section 5.5 thereof enumerated other allowances and fringe benefits not integrated into basic salary but allowed to continue only for incumbents as of June 30, 1989, while paragraph 5.6 directed the discontinuance of such payments effective November 1, 1989 and characterized post-date payments as illegal disbursement of public funds. The Philippine National Bank was, at the time material to the claims, a government-owned and controlled corporation subject to the Salary Standardization Law; it was subsequently privatized and incorporated as a private commercial bank through the Revised Charter of the Philippine National Bank under Executive Order No. 80, effective May 27, 1996.

The Philippine National Bank, then a government-owned and controlled corporation, employed the respondents on various dates after June 30, 1989. From the dates of their respective appointments until January 1, 1997, they were not paid the meal allowance, rice subsidy, sugar subsidy, children's allowance, dental, optical and outpatient benefits, consolidated medical plan for dependents, commutation of basic hospitalization benefit, benefits under the revised PNB Medical and Hospitalization Plan, and death benefits that were being enjoyed by other PNB employees who had been in the service as of July 1, 1989.

On August 12, 1998, the Supreme Court in Rodolfo S. de Jesus, Edelwina de Parungao, Venus M. Dozon and other similarly situated personnel of the Local Water Utilities Administration vs. Commission on Audit and Leonardo L. Jannoralin held that DBM-CCC No. 10 was ineffective because it had not been published in the Official Gazette or in a newspaper of general circulation, invoking Article 2 of the New Civil Code as amended by Executive Order No. 200.

PNB had meanwhile been privatized. On May 26, 1996, it was incorporated as a private commercial bank and registered with the Securities and Exchange Commission, its privatization having been effected through the Revised Charter of the Philippine National Bank under Executive Order No. 80, which took effect on May 27, 1996. On June 19, 1996, PNB passed Board Resolution No. 79, and on March 14, 1997 it issued General Circular No. 1-312/97, extending the enumerated allowances and fringe benefits to the respondents effective January 1, 1997.

Invoking the De Jesus declaration, the respondents filed a petition for mandamus on December 20, 1999, alleging that they were unjustly deprived of the benefits from their respective appointments until January 1, 1997. They contended that the withholding of the benefits constituted unfair discrimination and violated their right to equal protection, since incumbents in the service as of July 1, 1989 received the same benefits; that PNB erroneously interpreted Section 12 of R.A. No. 6758 to exclude employees appointed after June 30, 1989; and that the word "only" in Section 12 referred not to incumbents but to the additional compensation an employee could continue to receive. They argued that the extension of the benefits effective January 1, 1997 confirmed their entitlement and that the same should be reckoned from their respective appointments or from June 30, 1989.

PNB denied the material allegations and set up the affirmative defenses that the respondents had never been entitled to the benefits under R.A. No. 6758; that under Section 12 of that law the DBM was expressly empowered to determine what other additional compensation, being received by incumbents only as of July 1, 1989, would not be integrated into the standardized salary rates; that Philippine Ports Authority vs. Commission on Audit and Manila International Airport Authority vs. Commission on Audit had construed the provision to make July 1, 1989 crucial only to determine that the officer was then an incumbent actually receiving the benefit; that mandamus was improper because the claimed right was still debatable; that the petition was filed four years and thirteen days after the accrual of the cause of action, beyond the one-year period for mandamus; and that the equal protection clause is a safeguard against acts of the State and not against a private entity such as PNB.

The trial court found for the respondents and directed PNB, its President and Board of Directors to settle the claims of the petitioners listed in the petition and in the Manifestation dated April 18, 2000, including other claimants in PNB offices and branches nationwide, and to pay counsel attorney's fees equivalent to twenty percent of the total differentials due. The Court of Appeals affirmed, reading the phrase "only as of July 1, 1989" as qualifying "other additional compensation" rather than "incumbents," and holding that the date of hiring was neither a reasonable nor a substantial distinction.

• Stare Decisis: Petitioner invoked the doctrine of stare decisis, maintaining that the proper interpretation of Section 12 of R.A. No. 6758 had already been settled with finality in Philippine Ports Authority vs. COA, Manila International Airport Authority vs. COA, Philippine International Trading Corporation vs. COA, and Social Security System vs. COA, all of which held that only incumbents receiving the benefits as of July 1, 1989 were entitled to their continued grant.
• Misapplication of Cruz vs. COA: Petitioner argued that the Court of Appeals improvidently applied Cruz vs. COA, which nullified the cutoff date of October 31, 1989 arbitrarily fixed by the COA, and not the July 1, 1989 date fixed by the statute itself.
• Absence of Admission Through the 1997 Grant: Petitioner contended that by extending the benefits on January 1, 1997 it did not admit that respondents were priorly entitled to them; its privatization on May 27, 1996 enabled it to grant benefits as it deemed fit, whereas while it was still a government agency R.A. No. 6758 barred such grant as an illegal disbursement of public funds.
• Impropriety of Mandamus and Prescription: Petitioner argued that since respondents' right, if any, to the benefits under Section 5.5 of DBM-CCC No. 10 was still debatable, mandamus was not the proper remedy, which requires a legal right that is clear, well-defined and certain; and that the petition, filed on December 20, 1999, came four years and thirteen days after the accrual of the cause of action, mandamus being subject to a one-year period.
• Inapplicability of Equal Protection: Petitioner maintained that the constitutional right to equal protection is a safeguard against the acts of the State and not against an individual such as PNB, a private entity.

• Estoppel: Respondents maintained that their entitlement to the benefits was no longer in issue, as petitioner was estopped from assailing a claim it had already granted.
• Adoption of the Appellate Court's Reasoning: Respondents reiterated the arguments and justifications raised by the Court of Appeals in its assailed Decision.
• Propriety of Raising New Issues: Respondents explained that issues not raised below could no longer be raised by petitioner in its Memorandum, rendering any further discussion of those issues futile.
• Equal Protection: Respondents argued that upholding the distinction among employees on the basis of the date of their hiring violated the equal protection clause of the Constitution.

• Entitlement to Differentials: Whether respondents are entitled to the differentials of employees' benefits supposedly accruing from July 1, 1989 to January 1, 1997 under Section 12 of Republic Act No. 6758.
• Applicability of Cruz vs. COA: Whether the ruling in Irene Cruz, et al. vs. Commission on Audit is applicable to respondents' claim.
• Estoppel: Whether PNB is estopped from denying respondents' claim after it subsequently extended similar benefits to them effective January 1, 1997.
• Equal Protection: Whether there is a violation of the equal protection clause if the non-integration of additional compensation into the standardized salary rates, or the continuous enjoyment thereof, pertains exclusively to incumbents as of July 1, 1989.
• Propriety of Mandamus: Whether the writ of mandamus was properly issued to compel payment of the claimed benefits.

• Entitlement to Differentials: No. Under Section 12 of R.A. No. 6758, non-integrated additional compensation continues to be granted only to employees who were incumbents and were actually receiving those benefits as of July 1, 1989.
• Applicability of Cruz vs. COA: No. Cruz vs. COA nullified a cutoff date arbitrarily fixed by the COA, whereas July 1, 1989 was the date fixed by the law itself as the effectivity of R.A. No. 6758.
• Estoppel: No. The grant of benefits effective January 1, 1997 was a managerial prerogative exercised after privatization and did not amount to a representation that respondents had been entitled to the benefits before that date.
• Equal Protection: No. The law made a valid classification between incumbents already receiving the benefits on July 1, 1989 and other employees, and the constitutionality of the statute cannot be attacked collaterally or for the first time on appeal.
• Propriety of Mandamus: No. Mandamus lies only to command the performance of a ministerial duty, not one that is discretionary or prohibited by law.

• Entitlement to Differentials: The precise interpretation and application of Section 12 of R.A. No. 6758 had long been established in Philippine Ports Authority vs. COA and fortified by Manila International Airport Authority vs. COA, Philippine International Trading Corporation vs. COA, and Social Security System vs. COA. Those cases consistently held that allowances or fringe benefits, whether or not integrated into the standardized salaries, should continue to be enjoyed by employees who (1) were incumbents and (2) were receiving those benefits as of July 1, 1989. In Philippine Ports Authority vs. COA, the Court ruled that incumbent PPA officials enjoying the representation and transportation allowance as of July 1, 1989 should continue receiving it, explaining that the intention of the framers of the law was to phase out certain allowances and privileges gradually without upsetting the principle of non-diminution of pay, and that "the date July 1, 1989 becomes crucial only to determine that as of said date, the officer was an incumbent and was receiving the RATA, for purposes of entitling him to its continued grant." Philippine International Trading Corporation vs. COA confirmed that the legislature had no intention of revoking existing benefits enjoyed by incumbents at the time of the passage of R.A. No. 6758, the reservation of benefits to incumbents alone being consistent not only with the policy of non-diminution of pay but also with the prospective application of laws and the spirit of fairness and justice. Because the payment of benefits to employees hired after July 1, 1989 was properly withheld, the law having clearly reserved those benefits to incumbents already enjoying them before its enactment, the withholding ensured that the compensation of incumbents would not be diminished in the course of their continued employment with the government agency.
• Applicability of Cruz vs. COA: The reliance of the court a quo on Cruz vs. COA was misplaced. In that case the Court held that the specific date of hiring, October 31, 1989, had been not only arbitrarily determined by the COA but also used as an unreasonable and unsubstantial basis for awarding allowances. The basis for the ruling was not primarily the resulting disparity in salaries received for the same work rendered but, more important, the absence of a distinction in the law that allowed the grant of such benefits between those hired before and those hired after that date. Setting a particular date as a distinction was nullified not because it was constitutionally infirm or against the "equal pay for equal work" policy of R.A. No. 6758, but because the COA had acted without or in excess of its authority in arbitrarily choosing October 31, 1989 as the cutoff date, it being explained that "when the law does not distinguish, neither should the court," and neither should the COA. In the present case, the law itself set July 1, 1989 as the date on which employees should be incumbents, because that was when R.A. No. 6758 took effect; it was not an arbitrarily chosen date, there being sufficient reason for setting it as the cutoff point.
• Estoppel: Under Article 1431 of the Civil Code, through estoppel an admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying on it; Section 2(a) of Rule 131 provides that whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it. Estoppel, an equitable principle rooted in natural justice, prevents persons from going back on their own acts and representations to the prejudice of others who have relied on them. Applying the elements of estoppel in pais as discussed in Kalalo vs. Luz, the first and second elements are unavailing in relation to petitioner: when it extended the benefits on January 1, 1997, it merely admitted that only on that date did respondents become entitled to them, and did not falsely represent their prior entitlement. Such extension could not engender the false expectation that, because they were entitled to the benefits then, they must have been entitled to them earlier, and they therefore suffered no actual injury, detriment or prejudice other than crushed hopes based on an unfounded expectation. Prior to its privatization on May 27, 1996, respondents' non-entitlement had been determined by law; after that date, the grant was purely a managerial prerogative exercised by petitioner as a private company, which had been prohibited from extending those benefits while it was still a government-owned and controlled corporation.
• Equal Protection: By upholding the distinction among employees on the basis of the date of hiring, respondents collaterally challenged the constitutionality of R.A. No. 6758 on the ground of equal protection. For reasons of public policy, however, the constitutionality of a law cannot be attacked in a collateral way; a law is deemed valid unless declared null and void by a competent court, more so when the issue has not been duly pleaded in the trial court, the question of constitutionality being required to be raised at the earliest opportunity. Respondents not only failed to challenge the constitutionality of R.A. No. 6758 but used it in seeking compensation from petitioner, and the settled rule is that courts will not anticipate a question of constitutional law in advance of the necessity of deciding it. Moreover, a valid classification was made by the law in segregating other employees from the incumbents who were already receiving the benefits on July 1, 1989.
• Propriety of Mandamus: Since respondents have not shown any law requiring petitioner to grant the subject benefits to employees hired after July 1, 1989, the writ of mandamus was improvidently issued by the lower courts. Mandamus is issued to command the performance of a ministerial, not a discretionary, duty, much less one prohibited by law.

• Stare Decisis et Non Quieta Movere — Once the Court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same as in the earlier controversy. The Court applied the doctrine to hold that the interpretation of Section 12 of R.A. No. 6758 in Philippine Ports Authority vs. COA, Manila International Airport Authority vs. COA, Philippine International Trading Corporation vs. COA, and Social Security System vs. COA foreclosed any misgivings about the proper application of that provision.
• Non-Diminution of Pay and Prospective Application of Laws under Section 12, R.A. No. 6758 — The continued grant of additional compensation not integrated into standardized salary rates is reserved to incumbents who were already receiving such benefits as of July 1, 1989. The requisites are conjunctive: the employee must (1) have been an incumbent as of July 1, 1989, and (2) have been actually receiving the allowance or fringe benefit as of that date. The reservation serves the policy of non-diminution of existing pay and is consistent with the prospective application of laws and the spirit of fairness and justice; if a benefit was not yet existing when the law took effect, there was nothing to continue and no basis for applying the policy.
• Valid Classification under the Equal Protection Clause — A statutory classification that segregates incumbents already receiving benefits on July 1, 1989 from employees hired thereafter rests on a valid distinction, the date being that on which the law itself took effect and not one arbitrarily chosen by an implementing agency. The classification does not offend the equal protection clause.
• Collateral Attack on Constitutionality — The constitutionality of a law cannot be attacked in a collateral manner; it must be raised directly and at the earliest opportunity. A law is deemed valid unless declared null and void by a competent court, and courts will not anticipate a question of constitutional law in advance of the necessity of deciding it. A party who invokes a statute as the basis of a claim cannot simultaneously challenge its validity.
• Estoppel in Pais — As related to the party to be estopped, the essential elements are: (1) conduct amounting to false representation or concealment of material facts, or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) intent, or at least expectation, that this conduct shall be acted upon by, or at least influence, the other party; and (3) knowledge, actual or constructive, of the real facts. As related to the party claiming the estoppel, the elements are: (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (3) action or inaction based thereon of such character as to change the position or status of the party claiming the estoppel, to his injury, detriment or prejudice. The first and second elements were unavailing against PNB, whose grant of benefits after privatization carried no false representation of prior entitlement.
• Mandamus Lies Only for Ministerial Duties — Mandamus is issued to command the performance of a ministerial, not a discretionary, duty, much less one prohibited by law. It requires that the legal right of the claimant be clear, well-defined and certain; where the claimed right is debatable or rests on no law, the writ is improvidently issued.
• Publication as a Condition for Effectivity of Administrative Issuances — Under Article 2 of the New Civil Code, as amended by Executive Order No. 200, laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless otherwise provided. This was the ground on which De Jesus vs. COA declared DBM-CCC No. 10 ineffective, a declaration that respondents invoked as the basis of their claim.

• "An incumbent is a person who is in present possession of an office." — Quoted by the Court from Philippine Ports Authority vs. COA, this passage supplies the canonical definition of "incumbent" that anchors the two-part test for continued entitlement to non-integrated benefits under Section 12 of R.A. No. 6758.
• "The date July 1, 1989 becomes crucial only to determine that as of said date, the officer was an incumbent and was receiving the RATA, for purposes of entitling him to its continued grant." — Also from Philippine Ports Authority vs. COA and reiterated in this case, this is the formulation that fixes July 1, 1989 as the operative reckoning date for entitlement, and it is the passage most frequently cited in subsequent Salary Standardization Law litigation.
• "The basis for the Court's ruling was not primarily the resulting disparity in salaries received for the same work rendered but, more important, the absence of a distinction in the law that allowed the grant of such benefits -- between those hired before and those after the said date." — This passage distinguishes Cruz vs. COA from the present controversy, explaining why the nullification of the COA's October 31, 1989 cutoff does not affect the statutory July 1, 1989 cutoff.
• "Basic is the rule that mandamus is issued to command the performance of a ministerial, not a discretionary duty, much less one prohibited by law." — This states the ratio for setting aside the writ of mandamus, given that no law required PNB to grant the benefits to employees hired after July 1, 1989.

• Philippine Ports Authority vs. Commission on Audit, 214 SCRA 653 (1992) — Controlling precedent. Held that incumbent PPA officials enjoying the representation and transportation allowance as of July 1, 1989 should continue receiving it under Section 12 of R.A. No. 6758, and supplied the definition of "incumbent" and the rule that July 1, 1989 is crucial only to determine incumbency and actual receipt.
• Manila International Airport Authority vs. Commission on Audit, 238 SCRA 714 (1994) — Followed. Cited as fortifying the essential pronouncements of Philippine Ports Authority vs. COA on the interpretation of Section 12 of R.A. No. 6758.
• Philippine International Trading Corporation vs. Commission on Audit, 368 Phil. 478 (1999) — Followed. Confirmed the legislative intention not to revoke existing benefits enjoyed by incumbents at the time of the passage of R.A. No. 6758, consistent with the policy of non-diminution of pay and the prospective application of laws.
• Social Security System vs. Commission on Audit, G.R. No. 149240, July 11, 2002 — Followed. Cited among the cases that consistently construed Section 12 of R.A. No. 6758 as reserving the continued grant of non-integrated benefits to incumbents receiving them as of July 1, 1989.
• Cruz vs. Commission on Audit, 420 Phil. 102 (2001) — Distinguished. Held that the COA arbitrarily fixed October 31, 1989 as the cutoff date absent any distinction in the law; the ruling turned on the COA's lack of authority to choose the date, not on the invalidity of a statutory cutoff, and therefore did not apply to the July 1, 1989 date fixed by R.A. No. 6758 itself.
• De Jesus vs. Commission on Audit, 355 Phil. 584 (1998) — Cited as the source of the declaration that DBM-CCC No. 10 was ineffective for lack of publication, which the respondents invoked as the basis of their cause of action.
• Kalalo vs. Luz, 145 Phil. 152 (1970) — Followed. Supplied the essential elements of estoppel in pais, both as related to the party to be estopped and as related to the party claiming the estoppel, which the Court applied to reject respondents' estoppel argument.

• Section 12, Republic Act No. 6758 (Salary Standardization Law) — Consolidated all allowances into standardized salary rates except representation and transportation allowances, clothing and laundry allowances, subsistence allowance of marine officers and crew on board government vessels and hospital personnel stationed abroad, and such other additional compensation as may be determined by the DBM; provided that such other additional compensation, whether in cash or in kind, being received by incumbents as of July 1, 1989 not integrated into the standardized salary rates shall continue to be authorized. The provision is the source of the conjunctive requisites of incumbency and actual receipt as of July 1, 1989, and was the basis for denying respondents' claim.
• Section 5.5 and Paragraph 5.6, DBM Corporate Compensation Circular No. 10 — Section 5.5 enumerated the other allowances and fringe benefits not integrated into basic salary and allowed to continue only for incumbents as of June 30, 1989, namely rice subsidy, sugar subsidy, death benefits other than those granted by the GSIS, medical, dental and optical allowances and benefits, children's allowances, special duty pay or allowance, meal subsidy, longevity pay, and teller's allowances. Paragraph 5.6 directed the discontinuance of payment of such allowances and fringe benefits effective November 1, 1989 and treated payments made after that date as illegal disbursement of public funds. The circular was declared ineffective in De Jesus vs. COA for lack of publication, but the Court held that this did not enlarge the class of employees entitled under the statute.
• Article 2, New Civil Code, as amended by Executive Order No. 200 — Provides that laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided. This was the ground for the ruling in De Jesus vs. COA that DBM-CCC No. 10 was ineffective.
• Article 1431, Civil Code — Provides that through estoppel an admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying on it. The Court cited it as the statutory basis of estoppel but found its requisites unsatisfied.
• Section 2(a), Rule 131, Rules of Court — Establishes the conclusive presumption that whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it. The Court applied this provision in rejecting respondents' estoppel claim.
• Executive Order No. 80 (Revised Charter of the Philippine National Bank) — Took effect on May 27, 1996 and effected PNB's privatization. The Court relied on it to hold that only after that date was PNB released from the restrictions of R.A. No. 6758 and at liberty to determine the benefits its employees deserved.

Justice Angelina Sandoval-Gutierrez, Justice Renato C. Corona (on official leave), Justice Conchita Carpio Morales, and Justice Cancio C. Garcia concurred in the Decision. The Decision was attested to by Justice Artemio V. Panganiban as Chairman of the Third Division, and certified by Chief Justice Hilario G. Davide, Jr., pursuant to Section 13, Article VIII of the Constitution.