Santos vs. Court of Appeals

Separation pay under Section 11 of R.A. No. 7924 is computed only on the basis of the employee's years of service in the Metropolitan Manila Authority; prior government service for which the employee has already received retirement gratuity and pension cannot be tacked onto that computation, because doing so would constitute double compensation for exactly the same services in violation of the first paragraph of Section 8, Article IX-B of the 1987 Constitution, absent a specific statutory authorization.

Antonio P. Santos was appointed Judge of the Metropolitan Trial Court of Quezon City on 18 January 1983 and was reappointed to the same position after the military-backed EDSA revolt. On 1 April 1992 he optionally retired from the Judiciary under R.A. No. 910, as amended, receiving retirement gratuity for his entire years in government service and, five years thereafter, a regular monthly pension. On 2 December 1993 he re-entered government service as Director III of the Traffic Operation Center of the Metropolitan Manila Authority, an appointment approved by the Civil Service Commission. Congress thereafter enacted R.A. No. 7924 on 1 March 1995, reorganizing the MMA and renaming it the Metropolitan Manila Development Authority, with Section 11 thereof governing the benefits accruing to displaced employees.

Antonio P. Santos was appointed Judge of the Metropolitan Trial Court of Quezon City on 18 January 1983 and assumed office, and after the military-backed EDSA revolt he was reappointed to the same position. On 1 April 1992 he optionally retired from the Judiciary under R.A. No. 910, as amended, and received his retirement gratuity under that law for his entire years in the government service; five years thereafter he has been regularly receiving a monthly pension.

On 2 December 1993, Santos re-entered the government service as Director III of the Traffic Operation Center of the Metropolitan Manila Authority, an appointment approved by the Civil Service Commission. On 1 March 1995, Congress enacted R.A. No. 7924, which reorganized the MMA and renamed it the Metropolitan Manila Development Authority. Section 11 of that law, under the heading Transitory Provisions, directed that all officials and employees of the interim MMA continue to exercise their duties and receive their salaries and allowances until notice of change of duties or transfer, mandated strict enforcement of the civil service laws, rules and regulations pertinent to the displacement of affected personnel, and provided that the national government shall provide such amounts as may be necessary to pay the benefits accruing to displaced employees at the rate of one and one-fourth (1¼) month's salary for every year of service, with the proviso that employees qualified for retirement under existing retirement laws may opt to receive the benefits thereunder.

On 16 May 1996, the President issued Memorandum Order No. 372 approving the Rules and Regulations Implementing R.A. No. 7924. Pursuant thereto, the MMDA issued Resolution No. 16, series of 1996, which authorized the payment of separation benefits to the officials and employees of the former MMA who would be separated as a result of the implementation of R.A. No. 7924. On 30 August 1996, the MMDA issued a Memorandum to Santos informing him that in view of his voluntary option to be separated from the service, his services would automatically cease effective at the close of office hours on 15 September 1996, and that he would be entitled to separation benefits equivalent to one and one-fourth (1¼) monthly salary for every year of service as provided under Section 11 of the MMDA Law.

In view of some doubt or confusion as to the extent of his separation benefits, Santos submitted a Position Paper asserting that since the retirement gratuity he received under R.A. No. 910, as amended, is not an additional or double compensation, all the years of his government service, including those years in the Judiciary, should be credited in the computation of his separation benefits under R.A. No. 7924. The Assistant Manager for Finance of the MMDA referred the Position Paper to the Regional Office of the CSC-NCR. On 7 October 1996, Director IV Nelson Acebedo of the CSC-NCR handed down an opinion that the payment of petitioner's separation pay must be in accordance with Civil Service Resolution No. 92-063, which provides that while an employee who was paid separation or retirement benefits is not required to refund the same upon reemployment in the government service, for reasons of equity said benefits should nevertheless be deducted from the retirement or separation pay to be received, and that the employee has the option either to refund his separation or retirement benefits and claim his gross retirement or separation pay without deduction, or not to refund his separation or retirement pay but suffer a deduction of his retirement or separation gratuity for the total amount representing his previous separation or retirement pay received.

His motion for reconsideration having been denied, Santos elevated the opinion of Director Acebedo to the Civil Service Commission. On 21 October 1997, the CSC promulgated Resolution No. 97-4266 affirming the opinion of Director Acebedo and dismissing petitioner's appeal. Citing Chaves vs. Mathay, the CSC held that petitioner cannot be paid retirement benefits twice — one under R.A. No. 910, as amended, and another under R.A. No. 7924 — for the same services he rendered as MeTC Judge, and that he can only exercise one of two options in the computation of his separation pay: (1) to refund the gratuity he received under R.A. No. 910, as amended, after he retired from the MeTC and get the full separation pay for his entire years in the government, that is, nine years and two months with the MeTC plus two years and eight months for his services as Director III in the defunct MMA, at the rate of one and one-fourth salary for every year of service pursuant to the MMDA Memorandum dated 30 August 1996; or (2) to retain the gratuity pay he received for his services as MeTC Judge but with an equivalent amount deducted from the separation benefits due from the former MMA for his entire government service. On 9 June 1998, the CSC promulgated Resolution No. 98-1422 denying petitioner's motion for reconsideration.

The Court of Appeals, on 19 August 1999, held that the CSC was correct in dismissing petitioner's appeal from the opinion of Director Acebedo. It reasoned that there is no specific rule of law applicable to petitioner's case, but that it was equitable to deny his claim for payment of separation pay at the rate of one and one-fourth month's salary for every year of his service in government inclusive of the number of years he served as Judge of the Metropolitan Trial Court; that petitioner had already received and was continually receiving gratuity for his years of service as a Metropolitan Trial Court Judge, so that equity dictated he should no longer be allowed to receive further gratuity for said years of service in the guise of separation pay; that upon his retirement from his office as a Judge, petitioner had already closed a chapter of his government service and the State had already shown its gratitude for his services when he was paid retirement benefits; and that the State again wished to show its gratitude by awarding him separation pay for his services as a director of the MMA, another chapter of his government service which had come to a close by the reorganization of the MMA into the MMDA. The Court of Appeals, in limiting the computation of petitioner's separation pay to the number of years of his service at the MMA, applied the ruling in Chaves, Sr. vs. Mathay on the ground of its "common-sense consideration," quoting the pronouncement that if a retiree is being credited with his years of service under his first retirement in computing his gratuity under his second retirement, it is but just that the retirement gratuity received by him under his first retirement should also be charged to his account, and that claims for double retirement or pension would run roughshod over the well-settled rule that in the absence of an express legal exception, pension and gratuity laws should be so construed as to preclude any person from receiving double pension.

• Crediting of All Government Service: Petitioner asserted in his Position Paper that since the retirement gratuity he received under R.A. No. 910, as amended, is not an additional or double compensation, all the years of his government service — including those years in the Judiciary — should be credited in the computation of his separation benefits under R.A. No. 7924.
• Absence of Double Compensation: Petitioner maintained that his receipt of retirement gratuity and pension under R.A. No. 910, as amended, did not bar the inclusion of his judicial service in the computation of his separation pay, and he accordingly sought the setting aside of CSC Resolutions No. 97-4266 and No. 98-1422 before the Court of Appeals and, thereafter, of the Court of Appeals decision of 19 August 1999 before the Supreme Court.

• Scope of Separation Pay Under Section 11 of R.A. No. 7924: Whether petitioner's separation pay under Section 11 of R.A. No. 7924 should be computed on the basis of his entire government service, including his years of service as Judge of the Metropolitan Trial Court of Quezon City for which he had already received retirement gratuity and pension, or limited to his years of service in the Metropolitan Manila Authority.
• Double Compensation Under Section 8, Article IX-B of the 1987 Constitution: Whether crediting petitioner's years of service in the Judiciary in the computation of his separation pay under R.A. No. 7924, notwithstanding his receipt of retirement benefits under R.A. No. 910, as amended, would constitute additional, double, or indirect compensation prohibited by the first paragraph of Section 8, Article IX-B of the 1987 Constitution.

• Scope of Separation Pay Under Section 11 of R.A. No. 7924: No. The last paragraph of Section 11 of R.A. No. 7924 cannot be interpreted to refer to the total length of an MMA employee's service in government; since the provision grants separation pay to employees displaced by the reorganization, the separation pay can be based only on the length of service in the MMA, the separation partaking of the nature of a disturbance of compensation.
• Double Compensation Under Section 8, Article IX-B of the 1987 Constitution: Yes. Crediting petitioner's judicial service in the computation of his separation pay, notwithstanding his receipt of retirement gratuity and pension for those same years, would countenance double compensation for exactly the same services and would violate the first paragraph of Section 8, Article IX-B of the Constitution, which Section 11 of R.A. No. 7924 does not specifically authorize.

• Scope of Separation Pay Under Section 11 of R.A. No. 7924: The last paragraph of Section 11 of R.A. No. 7924, granting separation pay at the rate of "one and one-fourth (1¼) months of salary for every year of service," cannot by any stretch of logic or imagination be interpreted to refer to the total length of service of an MMA employee in the government, that is, to include such service in the government outside the MMA. Because the provision allows the grant of separation pay to employees who were to be displaced by the reorganization, the separation pay can be based only on the length of service in the MMA. The displacement amounted to an abolition of the office or position of the displaced employees, such as that of petitioner; the rule is settled that Congress may abolish public offices, such power being a consequent prerogative of its power to create public offices, subject to the condition that it be exercised in good faith. The separation partook of the nature of a disturbance of compensation; hence, the separation pay must relate only to the employment thus affected. Petitioner himself must have realized that Section 11 does not allow the tacking in of his previous government service, for if he were convinced that it does, he could have instead applied for retirement benefits, since by adding his years of service in the MMA to his previous years of service in the Government he could have retired under the third paragraph of Section 11, which provides that if qualified for retirement under existing retirement laws, said employee may opt to receive the benefits thereunder. Moreover, after the approval of his optional retirement on 1 April 1992, petitioner was fully paid his retirement gratuity under R.A. No. 910, as amended, and five years thereafter he has been receiving a monthly pension.
• Double Compensation Under Section 8, Article IX-B of the 1987 Constitution: Petitioner cannot take refuge under the second paragraph of Section 8 of Article IX-B of the Constitution, which provides that pensions or gratuities shall not be considered as additional, double, or indirect compensation. That provision simply means that a retiree receiving pension or gratuity can continue to receive such pension or gratuity even if he accepts another government position to which another compensation is attached. The retirement benefits which petitioner had received or has been receiving under R.A. No. 910, as amended, do not constitute double compensation; he could continue receiving the same even if, after his retirement, he had been receiving salary from the defunct MMA as Director III thereof, because said retirement benefits are rewards for his services as MeTC Judge, while his salary was his compensation for his services as Director III of the MMA. However, to credit his years of service in the Judiciary in the computation of his separation pay under R.A. No. 7924 notwithstanding the fact that he had received or has been receiving the retirement benefits under R.A. No. 910, as amended, would be to countenance double compensation for exactly the same services, namely, his services as MeTC Judge. Such would run counter to the policy of the Court against double compensation for exactly the same services and, more important, would be in violation of the first paragraph of Section 8 of Article IX-B of the Constitution, which proscribes additional, double, or indirect compensation unless specifically authorized by law. Section 11 of R.A. No. 7924 does not specifically authorize payment of additional compensation for years of government service outside of the MMA.

• Prohibition Against Double Compensation for the Same Services — The first paragraph of Section 8, Article IX-B of the 1987 Constitution provides that no elective or appointive public officer or employee shall receive additional, double, or indirect compensation unless specifically authorized by law. The Court applied this prohibition to bar the crediting of petitioner's years of judicial service in the computation of his separation pay under R.A. No. 7924, holding that to do so notwithstanding his receipt of retirement gratuity and monthly pension under R.A. No. 910, as amended, for exactly those same years would countenance double compensation for the same services, and that Section 11 of R.A. No. 7924 does not specifically authorize such payment.
• Pensions or Gratuities Are Not Additional, Double, or Indirect Compensation — The second paragraph of Section 8, Article IX-B of the Constitution provides that pensions or gratuities shall not be considered as additional, double, or indirect compensation. The Court construed this provision to mean simply that a retiree receiving pension or gratuity can continue to receive such pension or gratuity even if he accepts another government position to which another compensation is attached. It does not license the crediting of the same years of service in a second computation of benefits, because retirement benefits are rewards for prior service while the salary from the new position is compensation for the new service.
• Separation Pay Under Reorganization Laws Is Confined to the Employment Affected — Where a reorganization statute grants separation pay to employees displaced by the reorganization, the separation pay is computed only on the length of service in the office or agency affected. The displacement amounts to an abolition of office, and the separation partakes of the nature of a disturbance of compensation; hence, the separation pay must relate only to the employment thus affected and cannot be based on the employee's total length of service in the government.
• Power of Congress to Abolish Public Offices — Congress may abolish public offices, such power being a consequent prerogative of its power to create public offices. The power to abolish is subject to the condition that it be exercised in good faith.
• Construction of Pension and Gratuity Laws Against Double Pension — In the absence of an express legal exception, pension and gratuity laws should be so construed as to preclude any person from receiving double pension. The Court invoked this settled rule, as applied in Chaves vs. Mathay, in affirming the exclusion of petitioner's judicial service from the computation of his separation pay.

• "In the first place, the last paragraph of Section 11 of R.A. No. 7924 on the grant of separation pay at the rate of 'one and one-fourth (1¼) months of salary for every year of service' cannot by any stretch of logic or imagination be interpreted to refer to the total length of service of an MMA employee in the government, i.e., to include such service in the government outside the MMA." — This passage states the Court's primary statutory holding on the scope of Section 11 of R.A. No. 7924, confining the computation of separation pay to the employee's length of service in the MMA.
• "The separation partook of the nature of a disturbance of compensation; hence, the separation pay must relate only to the employment thus affected." — This is the ratio decidendi for limiting the separation pay to the employment affected by the reorganization, grounded on the characterization of the displacement as an abolition of office amounting to a disturbance of compensation.
• "However, to credit his years of service in the Judiciary in the computation of his separation pay under R.A. No. 7924 notwithstanding the fact that he had received or has been receiving the retirement benefits under R.A. No. 910, as amended, would be to countenance double compensation for exactly the same services, i.e., his services as MeTC Judge." — This passage articulates the constitutional ground of the ruling, applying the prohibition against double compensation to the crediting of prior service already compensated by retirement benefits.
• "This provision simply means that a retiree receiving pension or gratuity can continue to receive such pension or gratuity even if he accepts another government position to which another compensation is attached." — This defines the Court's construction of the second paragraph of Section 8, Article IX-B of the Constitution, distinguishing the permissible concurrent receipt of pension and salary from the impermissible double crediting of the same years of service.

• Chaves vs. Mathay, 37 SCRA 776 [1971] — The controlling precedent relied upon by the Civil Service Commission, the Court of Appeals, and the Supreme Court. The Court of Appeals applied its "common-sense consideration" — that if a retiree is credited with his years of service under his first retirement in computing his gratuity under his second retirement, the retirement gratuity received under the first retirement should also be charged to his account — and quoted its pronouncement that claims for double retirement or pension would run roughshod over the well-settled rule that, absent an express legal exception, pension and gratuity laws should be construed to preclude any person from receiving double pension.
• Espejo vs. Auditor General, 97 Phil. 216 [1955] — Cited in the Court's enumeration of authorities supporting the policy against double compensation for exactly the same services, and identified in the quoted Chaves vs. Mathay passage as the source of the "common-sense consideration" regarding the charging of prior retirement gratuity.
• Borromeo vs. GSIS, 110 Phil. 1 [1960] — Cited among the authorities for the policy against double compensation for exactly the same services; the quoted passage notes that Anciano vs. Otadoy affirmed Borromeo on the rule that pension and gratuity laws should be construed to preclude double pension.
• Anciano vs. Otadoy, 27 SCRA 200 [1969] — Cited among the authorities for the policy against double compensation for exactly the same services, and identified in the quoted passage as having affirmed Borromeo.
• Canonizado vs. Aguirre, G.R. No. 133132, 25 January 2000 — Cited, together with several older cases, for the settled rule that Congress may abolish public offices, subject to the condition that the power be exercised in good faith.
• Cruz vs. Primicias, 23 SCRA 998 [1968] — Cited for the condition that the congressional power to abolish public offices must be exercised in good faith.
• Manalang vs. Quitoriano, 94 Phil. 903 [1954]; Rodriguez vs. Montinola, 94 Phil. 964 [1954]; Castillo vs. Pajo, 103 Phil. 515 [1958]; Ulep vs. Carbonell, 4 SCRA 375 [1962]; Llanto vs. Dimaporo, 16 SCRA 599 [1966] — Cited collectively for the settled rule that Congress may abolish public offices.
• Government Service Insurance System vs. Civil Service Commission, 245 SCRA 179, 188 — Quoted in the Court of Appeals decision for the proposition that retirement benefits are rewards given to an employee who has given up the best years of his life to the service of his country.

• Section 11, R.A. No. 7924 (Transitory Provisions) — The provision directs that all officials and employees of the interim MMA continue to exercise their duties and receive their salaries and allowances until notice of change of duties or transfer, mandates strict enforcement of the civil service laws, rules and regulations pertinent to the displacement of affected personnel, and requires the national government to provide such amounts as may be necessary to pay the benefits accruing to displaced employees at the rate of one and one-fourth (1¼) month's salary for every year of service, with the proviso that employees qualified for retirement under existing retirement laws may opt to receive the benefits thereunder. The Court construed the last paragraph as confining the computation of separation pay to the employee's length of service in the MMA, and noted that the third paragraph's retirement option was available to petitioner had he believed his prior service could be tacked.
• Section 8, Article IX-B, 1987 Constitution (first paragraph) — Provides that no elective or appointive public officer or employee shall receive additional, double, or indirect compensation unless specifically authorized by law. The Court held that crediting petitioner's judicial service in the computation of his separation pay would violate this proscription, and that Section 11 of R.A. No. 7924 does not specifically authorize payment of additional compensation for years of government service outside of the MMA.
• Section 8, Article IX-B, 1987 Constitution (second paragraph) — Provides that pensions or gratuities shall not be considered as additional, double, or indirect compensation. The Court construed this to mean that a retiree receiving pension or gratuity may continue to receive the same even if he accepts another government position to which another compensation is attached, and held that petitioner could not take refuge under it to justify crediting the same years of service in a second computation of benefits.
• R.A. No. 910, as amended — The retirement law under which petitioner optionally retired from the Judiciary on 1 April 1992 and received retirement gratuity for his entire years in the government service, followed five years thereafter by a regular monthly pension. The Court noted that the law was further amended by R.A. No. 5095 and P.D. No. 1438, and corrected the Court of Appeals and the CSC for referring to it as R.A. No. 901 and R.A. No. 601, respectively.
• Civil Service Resolution No. 92-063 — The CSC issuance applied by Director Acebedo, providing that the payment of separation or retirement benefits is not subject to the prohibition against double compensation when officers and employees previously granted such benefits are rehired or reemployed in another government agency or office, that separated employees need not refund the benefits they received upon subsequent reemployment, but that for reasons of equity said benefits should nevertheless be deducted from the retirement or separation pay to be received, with the employee given the option either to refund the prior benefits and claim gross separation pay without deduction, or to retain the prior benefits and suffer a corresponding deduction.
• Memorandum Order No. 372 (16 May 1996) — Issued by the President, it approved the Rules and Regulations Implementing R.A. No. 7924, pursuant to which the MMDA issued Resolution No. 16, series of 1996, authorizing the payment of separation benefits to officials and employees of the former MMA who would be separated as a result of the implementation of R.A. No. 7924.

Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, and De Leon, Jr., JJ., concur.