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Case Digest Napocor

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CASE DIGEST: REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE OFFICE OF

THE SOLICITOR GENERAL (OSG) AS THE PEOPLE'S TRIBUNE, AND THE NATIONAL
POWER BOARD, PETITIONERS, VS. HON. LUISITO G. CORTEZ, PRESIDING JUDGE,
REGIONAL TRIAL COURT, BRANCH 84, QUEZON CITY, ABNER P. ELERIA, MELITO B.
LUPANGCO, NAPOCOR EMPLOYEES CONSOLIDATED UNION (NECU), AND NAPOCOR
EMPLOYEES AND WORKERS UNION (NEWU), RESPONDENTS. [G.R. No. 187257,
August 08, 2017].

FACTS: This case resolves the 16,500 Workers' Solicitous Motion for Reconsideration filed by
respondents National Power Corporation Employees Consolidated Union (NECU) and the
National Power Corporation Employees and Workers Union (NEWU)

A Petition for Mandamus was filed by NECU and NEWU with Branch 84, Regional Trial Court,
Quezon City, praying that the National Power Corporation (NAPOCOR) be ordered to release the
Cost of Living Allowance (COLA) and Amelioration (AA) allegedly withheld from them from July
1, 1989 to March 19, 1999. NECU and NEWU believed that they were among the government
employees whose COLA and AA were not factually integrated into their basic salary upon the
implementation of Republic Act No. 6758.

The trial court granted their Petition and awarded a total of P6,496,055,339.98 as alleged back
COLA and AA with P704,777,508.60 as legal interest. A Writ of Execution was issued.

The Office of the Solicitor General and the Secretary of Budget and Management separately
filed Petitions for Certiorari with the Supreme Court to nullify the trial court's issuances.

On February 7, 2017, the Court rendered a Decision granting the Petitions for Certiorari. The
Supreme Court held, among others, that respondents NECU's and NEWU's COLA and AA for the
period July 1, 1989 to March 19, 1999 were already factually integrated into their basic salaries,
by virtue of Section 12 of Republic Act No. 6758 and Memorandum Order No. 198, series of
1994.

In a motion to reconsider, NECU and NEWU insist that law, jurisprudence, and evidence support
their contention that their COLA and AA were deducted from their salaries from July 1, 1989 to
March 19, 1999. In particular, they distinguish NAPOCOR workers into three (3) categories. The
first category includes workers already employed when Republic Act No. 6758 took effect and
whose COLA and AA were integrated into their basic salaries only up to 1993. The second
category covers those hired after Republic Act No. 6758 took effect and whose COLA and AA
were allegedly deducted from 1989 to 1999. The third category consists of employees hired
after the effectivity of Republic Act No. 7648 and whose COLA and AA were allegedly deducted
from 1994 to 1999.

ISSUE: NECU and NEWU attempt to sway the Court by-insisting that those hired after Republic
Act No. 6758 took effect have never received their COLA and AA and that these allowances
were deducted from their basic pay.

HELD: NECU and NEWU are wrong.

The Court clarified that those who were already receiving COLA and AA as of July 1, 1989,  but
whose receipt was discontinued due to the issuance of DBM-CCC No. 10, were
entitled to receive such allowances during the period of the Circular's ineffectivity,
or from July 1,1989 to March 16,1999. The same factual premise was present
in Metropolitan Waterworks and Sewerage System , wherein this Court reiterated
that those already receiving COLA as of July 1, 1989 were entitled to its payment
from 1989 to 1999.

In neither of these cases did this Court suggest that the compensation of the employees after
the promulgation of Republic Act No. 6758 would be increased with the addition of the COLA
and AA. If the total compensation package were the same, then clearly the COLA or AA, or both
were factually integrated.

Republic Act No. 6758 remained effective during the period of ineffectivity of DBM-CCC No. 10.
Thus, the COLA and AA of NAPOCOR officers and employees were integrated into the
standardized salaries effective July 1, 1989 pursuant to Section 12 of Republic Act No. 6758,
which provides:
Section 12. Consolidation of Allowances and Compensation. - All allowances, except for
representation and transportation allowances; clothing and laundry allowances; subsistence
allowance of marine officers and crew on board government vessels and hospital personnel;
hazard pay; allowances of foreign service personnel stationed abroad; and such other additional
compensation not otherwise specified herein as may be determined by the DBM, shall be
deemed included in the standardized salary rates herein prescribed. Such other additional
compensation, whether in cash or in kind, being received by incumbents only as of July 1, 1989
not integrated into the standardized salary rates shall continue to be authorized.
Existing additional compensation of any national government official or employee paid from
local funds of a local government unit shall be absorbed into the basic salary of said official or
employee and shall be paid by the National Government. Those who were hired after the
implementation of Republic Act No. 6758, or after July 1, 1989, did not receive a lesser
compensation package than those who were hired before July 1, 1989. To emphasize,
respondents NECU's and NEWU's COLA and AA were integrated into their basic salary by virtue
of Section 12 of Republic Act No. 6758.

Section 12 has never been ineffective or rendered unconstitutional. Thus, all allowances not
covered by the exceptions to Section 12 are presumed to have been integrated into the basic
standardized pay. The receipt of a transition allowance is not proof that only those who were
hired before July 1, 1989 received their COLA and AA. As this Court explained in its February 7,
2017 Decision, the transition allowance was given only to comply with the non-diminution
clause of the law. It was never meant as an additional compensation to the standardized pay.

The Court likewise clarified that upon the implementation of Republic Act No. 7648, NAPOCOR
workers were covered by a new compensation plan. All prior questions on the non-publication
of Department of Budget and Management Corporate Compensation Circular No. 10 would no
longer apply to the determination of whether COLA and AA were withheld. Furthermore, the
new compensation plan under Republic Act No. 7648 already incorporated all benefits
previously integrated, including the COLA and AA.
The alleged "Exhibit C" presented by respondents NECU and NEWU as evidence to prove that
the COLA and AA were factually deducted from their basic pay is unmeritorious. It appears to
be a collection list submitted before the Regional Trial Court in compliance with the Writ of
Execution dated March 23, 2009. The list specifies names of employees, a computation of their
alleged entitlements to their COLA and AA, and deductions for attorney's fees and docket fees.
However, these computations were made only after the trial court had ruled in their favor. This
Court has already ruled that the trial court gravely abused its discretion in granting the
judgment award. Thus, these computations do not prove conclusively that respondents NECU's
and NEWU's COLA and AA were withheld from July 1, 1989 to March 19, 1999.

Respondents NECU and NEWU, all 16,500 of them, were in a position to submit to this Court
any pay slip or Notice of Position Allocation and Salary Adjustment showing an actual deduction
of the COLA and AA from July 1, 1989 to March 19, 1999. They have failed to do so. As it
stands, respondents NECU and NEWU have failed to prove that their COLA and AA
were factually deducted from their basic pay.

Interestingly, while the 16,500 Workers' Solicitous Motion for Reconsideration was pending, two
(2) motions were filed by the law firm of Angara Abella Concepcion Regala & Cruz (ACCRA),
formally entering its appearance as lead counsel on behalf of respondents NECU and NEWU.
[33] These motions were an Entry of Appearance with Omnibus Motion for Leave of Court and
Time to File Supplemental Motion for Reconsideration  and a Motion for Leave to File and Admit
Attached Supplemental Motion for Reconsideration.

The ACCRA pleadings do not contain a conforme from respondents NECU and NEWU or a
withdrawal of appearance from their counsel, Atty. Napoleon Uy Galit (Atty. Galit). It also
appears from ACCRA'S affidavits of service that there were no copies furnished to Atty. Galit or
to respondents NECU and NEWU. While motions for reconsideration are not among the
pleadings required to be verified,[36] this circumstance is highly unusual, especially considering
that the grant of a motion for reconsideration in this case may result in a more than P7 billion
judgment award.

Nonetheless, in view of the denial of the 16,500 Workers' Solicitous Motion for Reconsideration,
this Court finds that it is no longer necessary to pass upon ACCRA'S pleadings.
REPUBLIC v. LUISITO G. CORTEZ, GR No. 187257, 2017-02-07
Facts:
On August 21, 1989, Congress enacted Republic Act No. 6758, or the Compensation and
Position Classification Act of 1989, to standardize compensation and benefits of public
employees, effective July 1, 1989.
The law applied to all positions, whether appointive or elective, including those in
government-owned and controlled corporations.
On October 2, 1989, the Department of Budget and Management issued Corporate
Compensation Circular No. 10 (DBM-CCC No. 10),[14] which provided for the integration of
COLA, AA, and other allowances into the standardized salaries of public employees
effective November 1, 1989.
On May 28, 2007, the Committee issued a Certification that the COLA and AA were not
integrated into the salaries of NAPOCOR employees hired from July 1, 1989 to March 16,
1999.[31] NAPOCOR "thereafter referred the matter to the Department of Budget and
Management[.]"
Regional Trial Court rendered its Decision[43] in favor of NECU and NEWU.
On March 20, 2006, the Department of Budget and Management issued Corporate
Compensation Circular No. 12,[163] providing the guidelines for implementation of this
Court's decisions on the grant of additional allowances to officers and employees of
government-owned and controlled corporations and government financial institutions.
transition allowance
Issues:
Whether NAPOCOR employees are entitled to the payment of their COLA and AA from the
period of July 1, 1989 to March 16, 1999.
Whether the COLA and AA were already deemed factually integrated into the standardized
salaries pursuant to Section 12 of Republic Act No. 6758.
Whether the COLA and AA were already integrated into the standardized salaries pursuan
Whether the trial court violated the Constitution when it ordered NAPOCOR to back pay
COLA and AA from its corporate funds.
Gutierrez, et al. v. Department of Budget and Management, et al.
Ruling:
COLA and AA are already deemed integrated into the standardized salaries of the
NAPOCOR employees from July 1, 1989 to December 31, 1993.
Thus, in order to conclude that the NAPOCOR employees were not able to receive their
COLA and AA upon the implementation of the New Compensation Plan, it must first be
determined whether its implementation resulted in the diminution of their salaries and
benefits.Evidence on record, however, shows that the affected employees suffered no
diminution in their compensation upon the implementation of the New Compensation Plan
on January 1, 1994.
National Electrification Administration v. Morales... while any entitlement to the back
payment of allowances under Republic Act No. 6758 may be adjudicated before the trial
court, the parties must file a separate action before the Commission on Audit for the
satisfaction of any judgment award
Principles:
The implementation of Republic Act No. 6758 resulted in the integration of all allowances
previously received, including Cost of Living Allowance and Amelioration Allowance, into the
basic standardized salary. When a government entity ceases to be covered by Republic Act
No. 6758, the new position classification and compensation plan must also include all
allowances previously received in the basic salary, in line with the principle of non-
diminution of pay.
The integration of COLA into the standardized salary rates is not repugnant to the law.
Money claims and judgments against the government must first be filed with the
Commission on Audit. Trial courts have already been strongly cautioned against the
issuance of writs of execution in cases involving the disbursement of public funds in
Supreme Court Administrative Circular No. 10-2000:

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