SC junks COA ruling denying allowances to PPA employees

The Supreme Court reversed a decision of the Commission on Audit denying cost of living and amelioration allowances to employees of the Philippine Ports Authority hired after July 1, 1989.

The SC decision came after the PPA employees filed a petition for certiorari assailing COA's May 27, 2003 decision and October 16, 2003 resolution that denied their petitions for "lack of merit."

The PPA has been paying its officials and employees COLA and amelioration allowances equivalent to 40 percent and 10 percent, respectively, of their basic salary pursuant to various legislative and administrative issuances.

But in the last quarter of 1989, the PPA stopped the payment in view of Corporate Compensation Circular No. 10 prescribing the implementing rules and regulations of the Salary Standardization Law, which integrated the allowances into the basic salary effective July 1, 1989.

However, the SC declared CCC No. 10 as ineffective and unenforceable due to non-publication.

Consequently, the PPA board passed Resolution No. 1856 directing the payment of COLA and amelioration back pay to PPA personnel in the service from July 1, 1989 to March 16, 1999, the date of publication of CCC No. 10.

However, the PPA auditor requested the opinion of the General Counsel on the propriety of the payment of the back pay. The PPA auditor accordingly ruled against granting the back pay.

The COA ruled that, "in the absence of effective integration of the COLA and amelioration allowance into the basic salary in 1989, the inevitable conclusion is that they are deemed not integrated from the time RA 6758 was promulgated until DBM-CCC No. 10 was published in March 1999."

During that period, it disallowed the disputed allowances on the ground that they fell under Section 12 of RA 6758, saying that only officials hired on or before July 1, 1989 were entitled to receive backpay equivalent to the additional compensation, COLA and amelioration allowance.

But the petitioners, in their motion for reconsideration, contended that "whether or not herein petitioners - who were hired by the Philippine Ports Authority on various dates after July 1, 1989 - are entitled to the payment of back pay for cost of living allowance (COLA) and amelioration allowance."

The Office of the Solicitor General disagreed with the COA and argued that: "petitioners [were] legally entitled to their accrued COLA and amelioration allowance as a matter of right."

The petitioners assailed the COA for allowing only incumbents as of July 1, 1989 to receive COLA and amelioration allowance during the "ineffectivity" of DBM-CCC No. 10 from July 1, 1989 to March 16, 1999.

They contend that the COLA and the amelioration allowance did not automatically become "not integrated" benefits within the purview of Section 12 of RA No. 6758 or the Consolidation of Allowances and Compensation Law.

The DBM issued on October 2, 1989 CCC No. 10, which enumerated the various allowances that were deemed "integrated" into the standardized basic salary that included the COLA and amelioration allowance.

However, because of its lack of publication, DBM-CCC No. 10 was declared ineffective on August 12, 1998.

In other words, during the period that DBM-CCC No. 10 was in legal limbo, the COLA and the amelioration allowance were not effectively integrated into the standardized salaries.

The SC cited the PNB vs. Palma case in which the respondents sought by mandamus to compel the petitioner to grant them certain fringe benefits and allowances that continued to be given to Philippine National Bank employees hired prior to July 1, 1989.

SC held that PNB could not be compelled to do so, because the respondents had been hired after that date. Under Section 12 of RA 6758, only "incumbent" government employees (as of July 1, 1989) may continue to receive the benefits, apart from their standardized pay.

In the case of the PPA, it already granted petitioners the COLA and the amelioration allowances, even if they were hired after July 1, 1989. The only issue is whether they should continue to receive the benefits during the period of the "ineffectivity" of DBC-CCC No. 10.

As pointed out by the OSG that until and unless the DBM issued implementing rules that exclude the COLA and the amelioration allowance, there could not have been any valid notice to the concerned government employees that those allowances were deemed included in the standardized salary rates.

"Consequently, there was no reason or basis to distinguish or classify PPA employees into two categories for purposes of determining their entitlement to the back payment of those unpaid allowances during the period in dispute," the SC decision read.

The higher court explained that in consonance with the equal-protection clause of the Constitution, and considering that the employees were all similarly situated as to the matter of the COLA and the amelioration allowance, they should all be treated similarly.

"All - not only incumbents as of July 1, 1989 - should be allowed to receive back pay corresponding to the said benefits, from July 1, 1989 to the new effectivity date of DBM-CCC No. 10 - March 16, 1999," it said, adding that the principle of equal protection is not a barren concept that may be casually swept aside.

With this, the SC granted the PPA employees' petition and ruled that the decision and resolution of COA be "annulled and set aside." - Liv G. Campo