PHILIPPINE PORTS AUTHORITY AND ROGELIO A. DAYAN, RUFILO L. TAN, NORA A. BUENVIAJE, FOR THEIR OWN AND IN BEHALF OF SOME 289 PPA OFFICIALS AND SUPERVISORS, PETITIONERS, VS. COMMIS…

The issue to be resolved in this petition for certiorari
is whether or not the petitioners-officials may still receive their
representation and transportation allowance (RATA) at the rates provided for by
Letter of Implementation (LOI) No. 97.

Petitioner Philippine Port Authority (PPA), created by virtue of
Presidential Decree (PD) No. 857, as amended, is a government-owned and
controlled corporation in charge of port administration and operation in the
country.

On August 22, 1976, PD No. 985 was issued to standardize the
compensation of government officials and employees, including those in
government owned and controlled corporations (GOCCs). Pursuant to said decree, LOI No. 97 dated August 31, 1979 was
issued authorizing the implementation
of standard compensation position classification plans for the
infrastructure/utilities group of GOCCs. Section 5 (g) of this LOI states that “representation and
transportation allowances may be authorized by individual corporations for
managerial and supervisory positions, subject to approval of the Ministry of
the Budget, which shall not exceed 40% of basic pay.” (Annex C, Rollo, p.
62)

Petitioner PPA thereafter issued Memorandum Circular No. 57-87
dated October 1, 1987, which provides:

“3.2 The following PPA officials/employees are entitled to RATA
equivalent to 40% basic salary.

3.2.1 Managerial Positions

3.2.1.1 GM, AGMs

3.2.1.2 Department/Port/Project
Managers

3.2.1.3 PPA Board Secretary/HO Staff Unit Heads/Head Executive
Assistant

3.2.2 Supervisory Positions

3.2.2.1 Head office/POM Division Managers

3.2.2.2 Other PMUs – Section Chiefs

(Rollo, p. 107)

The officials entitled to RATA under this circular shall
hereinafter be referred to as first category officials.

On August 9, 1989, Congress passed Republic Act (RA) No. 6758
entitled “An Act Prescribing a Revised Compensation and Position
Classification in the Government and for other Purposes.” Said act took
effect on July 1, 1989. Section 4
thereof states that the compensation and position classification system
provided therein shall apply to all positions
in the government, including GOCCs.

On October 23, 1989, PPA issued Memorandum Circular No. 36-89
entitling all PPA personnel occupying the positions of Section Chief or who
head equivalent units, Terminal Supervisors, and senior personnel occupying
positions with salary grades of 17 and above, to a monthly RATA equivalent to
20% of their basic salary. (Rollo, p.
109) The officials entitled to RATA under this circular shall hereinafter be
referred to as second category officials.

In Memorandum Circular No. 46-90 dated November 14, 1900, the
RATA of these second category officials was increased to 40% of standardized
salary, effective January 1, 1990. (Rollo, p. 111)

Pursuant to the three aforementioned circulars, PPA paid RATA
differentials to its first category officials for the period July 1989 to August 1990 in the amount of
P826,131.60. The increase in salary due
to the standardization mandated by RA No. 6758 increased the basis of the RATA, hence, the payment of the
differentials.

Payments of RATA to the second category officials, amounting to
P246,456.14 for the period June 1 to October 30, 1989, were also made.

However, respondent Commission on Audit (COA) Corporate Auditor Judy M. Hugo disallowed upon post-
audit the payment of the P826,131.60 RATA
differentials.

In her letter dated November 14, 1990, respondent Hugo stated:

“The increase in representation and transportation allowance
(RATA) of PPA officials after June 30, 1989, the effectivity of RA 6758, is no longer based on 40% of
basic salary but on the highest amount of RATA received by the incumbent as of
June 30, 1989. (Position of the
Secretary of Department of Budget and Management per letter dated September 17,
1990 printed in full under COA Memorandum No. 90-679 dated October 30, 1990).

In view of this, you are
hereby directed to settle immediately the above disallowance and furnish this
Office of (sic) a true copy of Official Receipt in case of
settlement/payment. Failure to do so may
compel this Office to adopt the necessary measures to enforce settlement
hereof.” (Rollo, p. 57)

The P246,456.14 payment of RATA to the second category officials
was likewise disallowed in audit. The
respondent COA auditor relied on COA Memorandum No. 90-653 dated June 4, 1990
which provides that “any increase in allowances and fringe benefits after
June 30, 1989 is considered irregular, if not illegal, and hence shall be
disallowed in audit.” (Rollo, p. 126) The respondent also directed PPA’s
attention to COA Memorandum No. 90-679 dated October 30, 1990 which states that
“LOI No. 97 x x x is repealed by Section 16 of RA No. 6758.” (Rollo,
p. 127)

Petitioner PPA brought its case before respondent COA. On May 2, 1991, the COA denied PPA’s motion
for reconsideration and ruled:

“After a circumspect
evaluation of the facts herein obtaining, this Commission finds no justifiable
reason to grant your instant request. As declared by the Department of Budget and Management, LOI 97 is
inconsistent with, and therefore has been repealed by, Section 16 of R.A. 6758. (Letter dated September 17, 1990, to LWUA) Such stand of the DBM
has binding effect following the well-settled doctrine that construction of
laws by executive officers charged with the duty of implementing or enforcing
the same should be given controlling weight. (Salaria v. Buenviaje, G.R. No. 45642, February 28, 1978) Moreover, to
allow officials of the PPA to receive RATA at rates higher than those
authorized for officials of other government agencies would violate the spirit
and intent of RA 6758.” (Rollo, pp. 55-56)

Hence, this petition. Petitioner PPA is joined by all the affected PPA officials whose RATA
and RATA differentials were disallowed.

The first issue that addresses itself to this Court is whether or
not the petitioners-officials are still entitled to the RATA provided for under
LOI No. 97.

The petitioners are of the view that LOI No. 97, particularly
Section 5(g) thereof providing for RATA was not repealed by RA No. 6758. To support this position, the petitioners
cite Opinion No. 68 dated March
23, 1990 issued by the Office of the Government Corporate Counsel (OGCC),
Department of Justice. The opinion
answered a query posed by the Metropolitan Waterworks and Sewerage System
(MWSS), also a government-owned
and controlled corporation, as to whether or not the RATA authorized under LOI No. 97 may be increased or
adjusted to a maximum of 40% of basic pay despite the passage of RA No.
6758. The OGCC answered in the
affirmative and opined that Section 5(g) of LOI No. 97 was not repealed by RA
No. 6758. Thus:

“xxx except for Sections 2 and 16 of
P.D. 985 which are expressly repealed, all other laws, decrees and issuances or parts thereof authorizing
the fixing of positions, salaries and allowances of government officials and
employees shall be deemed repealed only if these are inconsistent with
the provisions of R.A. 6758. Section
5(g) of LOI 97 is not inconsistent with R.A.
6758 as precisely, this is the basis of the RATA which is continued to
be authorized under Section 12 of said law. To construe otherwise would render
ineffective said section, as
before the RATA is allowed to
continue, there must be a previous law, granting the same in the first place. Moreover, the statement in Section 5.4. of Corporate Compensation
Circular No. 10 that incumbents are allowed to receive RATA ‘at the highest amount legally
authorized as of June 30, 1989’ in
effect results in the incorporation by reference of all laws, decrees and rules
defining the maximum amount of RATA that
employees and officials of government corporations may receive.

Premises considered, it is our opinion that there is no legal
obstacle to an increase or adjustment of the RATA of officials to the maximum amount prescribed under Section
5(g) of LOI 97.” (Rollo, pp. 121-122)

Respondent COA meanwhile posits that LOI No. 97 is inconsistent
with RA No. 6758. It avers that while
repeals by implication are not favored, a reading of LOI No. 97 and RA No. 6758
would readily show that the latter act covers practically the whole subject of
the earlier one and is clearly intended as a substitute. Furthermore, respondent COA maintains, RA
No. 6758 is a complete enactment on the subject of compensation and position
classification system in the government and applies to GOCCs. RA No. 6758 has therefore repealed LOI No.
97 which covered the same subject matter on compensation and position
classification in the infrastructure and utilities group of GOCCs.

Section 12, first
paragraph, of RA 6758 reads:

“SEC. 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
services 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.” (Underlining ours)

Under the first sentence, RATA does not form part of the
standardized salary. The rationale for
this may be extracted from the sponsorship speech of Senator Romulo on Senate
Bill No. 862, now, RA No. 6758:

“Under the standardization scheme, all allowances other than for transport and hazard are integrated
into the prescribed salary rates. Such integration is necessary, in view of the 17 or so
salary pay plans now existing and
operating in the government
covering basic pay alone and the various allowances being given to different
groups of government employees. Without
their integration, compensation standardization in the real sense cannot be
attained. However, transportation
and representation allowances are not integrable because besides being flexible
in nature, they are given only to
special positions.” (Underlining ours; Transcript of Senate
deliberations, pages 51?52; June 7,1989)

Moreover, as stressed by the OGCC in opinion No. 59 dated March
14, 1990 (Rollo, pp. 113-114), RATA serves to defray the expenses of a
government official while in the pursuit of his official functions. If these allowances are consolidated with
the standardized rate, then the government official or employee will be
compelled to spend his personal funds in attending to his duties.

But while RATA does not form part of standardized salary, it does
not signify that Congress did not intend to establish a uniform RATA for
particular positions covered by the law. Even prior to RA 6758, the General Appropriations Acts provided for a
standard RATA for a specified rank. Petitioner PPA and other GOCCs in the infrastructure and utilities
sector however were exempted from limiting the RATA of their officials to those
mandated by the General Appropriations Acts because LOI No. 97 provided for a
higher RATA. Unfortunately for the
petitioners, the exemptions have been converted by law into concepts and
policies of standardization. The GOCCs
have not raised any constitutional or specific statutory grant of fiscal
autonomy or non-diminution of incomes during the tenures of their officials as
would raise questions on the validity of the provision of law now being
questioned.

Now, under the second sentence of Section 12, first paragraph, the RATA enjoyed by these PPA
officials shall continue to be authorized only if they are “being received
by incumbents only as of July 1,
1989.” RA 6758 has therefore, to this extent, amended LOI
No. 97. By limiting the benefit of the
RATA granted by LOI No. 97 to incumbents, Congress has manifested its
intent to gradually phase out this RATA privilege under LOI No. 97 without upsetting its policy of non-diminution of pay.

The legislature has similarly adhered to this policy of
non-diminution of pay when it
provided for the transition
allowance under Section 17 of RA 6758 which reads:

“SEC. 17. Salaries of
Incumbents. – Incumbents of positions presently receiving salaries and
additional compensation/fringe benefits including those absorbed from local
government units and other emoluments, the aggregate of which exceeds the standardized salary rate as
herein prescribed, shall continue to receive such excess compensation, which
shall be referred to as transition allowance. The transition allowance shall be reduced by the amount of salary
adjustment that the incumbent shall receive in the future.”

While Section 12 refers to allowances that are not integrated
into the standardized salaries whereas Section 17 refers to salaries and
additional compensation or fringe benefits that are integrated into the standardized salaries, both
sections are intended to protect incumbents who are receiving said salaries
and/or allowances at the time RA 6758 took effect.

An incumbent is a person who is in present possession of an
office (Roseo U. Tejada and Radito C. Ching v. Hon. Eufemio C. Domingo, G.R.
No. 91860, (205 SCRA 138 [1992]) quoting Black’s Law Dictionary, Fifth ed.,
691).

The consequential outcome, under sections 12 and 17, is that if
the incumbent resigns or is promoted to a higher position, his successor is no
longer entitled to his predecessor’s RATA privilege under LOI No. 97 or to the
transition allowance.

We have earlier classified the petitioners officials into
two. The first category is composed of
those who, pursuant to LOI No. 97 and Memorandum Circular No. 57-87 dated
October 1, 1987, were granted and were receiving RATA equivalent to 40% salary
prior to July 1, 1989, the effectivity of RA 6758. The second category consists of those who, as of July 1, 1989
were not receiving the RATA privilege under LOI No. 97. These officials were given RATA after July
1, 1989, pursuant to Memorandum Circular No. 36-89 dated October 23, 1989. Said circular, however, provided for a retroactive
grant of RATA from June 1, 1989. Under
Memorandum Circular No. 46-90 dated November 14, 1990, the RATA of this second
set of officials was increased from 20% to 40% of standardized salary.

Applying the provisions of Section 12 to the petitioners’ case,
we rule that only the first category officials are entitled to the continued
RATA benefit under LOI No. 97. The
first category officials were incumbents as of July 1, 1989 and more
importantly, they were receiving the RATA provided by LOI No. 97 as of July 1,
1989.

While the second category officials were incumbents as of July 1,
1989, they were not receiving said RATA as of July 1, 1989.

True, LOI No. 97 provides that these second category officials
may likewise be given RATA not exceeding 40% basic salary, but this provision
did not create a vested right in their favor. A vested right is one which is absolute, complete and unconditional, to
the exercise of which no obstacle exists, and which is immediate and perfect in
itself and not dependent upon a contingency. (Development Bank of the Philippines v. Court of Appeals, 96 SCRA 359
[1980]) The grant of RATA under LOI No. 97 to these officials was still
discretionary on the part of the PPA management. It was not absolute nor was it unconditional. Unfortunately, when the PPA management
finally authorized the giving of RATA to these second category officials, such
was no longer allowed under RA 6758.

The retroactive grant of the RATA to June 1, 1989 does not have
any material effect, since management could no longer confer the RATA privilege
after July 1, 1989. Moreover, such
retroactive grant could have no other purpose than to circumvent the provision
of Section 12 of RA No. 6758.

Additionally, Section 16 of RA No. 6758 states:

“SEC. 16. Repeal
of Special Salary Laws and Regulations.
– All laws, decrees, executive orders, corporate charters, and other issuances
or parts thereof, that exempt agencies from the coverage of the System, or that
authorize and fix position classification, salaries, pay rates or allowances of specified positions, or groups of
officials and employees or of agencies, which are inconsistent with the System,
including the proviso under
Section 2, and Section 16 of Presidential
Decree No. 985 are hereby repealed.”
(Underlining ours)

The repealed proviso Section 2 of PD No. 985 reads:

“xxx Provided, that notwithstanding a standardized salary
system established for all employees, additional financial incentives
may be established by government corporations
and financial institutions for their employees
to be supported fully from their corporate
funds and for such technical positions as may be approved by the
President in critical government agencies.” (Underlining ours)

The second “Whereas” clause of LOI No. 97, which reads:

“Whereas, the said Decree authorizes the adoption of
additional financial incentives for viable and profit-making corporations and
those performing critical functions, to be supported from net earnings and
profits of such corporations.”

clearly, shows that the RATA grant under
Section 5(g) thereof was anchored on the
aforementioned repealed proviso of Section 2 of PD No. 985.

The effect of this repeal is that after July 1, 1989, additional
financial incentives such as RATA may no longer be given by GOCCs with the
exception of those which were authorized to be continued under Section 12 of RA
6758. Hence, the giving of the disputed RATA to the second category PPA
officials will be tantamount to the conferment of additional financial
incentives which is no longer
allowed under Section 16 of RA No. 6758.

The petitioners argue that the second sentence in Section 12 of
RA 6758 which reads:

“xxx 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.”

refers to allowances not integrated into
the standardized salary other than those enumerated in the preceding
sentence. (Memorandum for the
Petitioners, p. 23) This contention is untenable. If petitioners’ position were to be followed to its logical
course then there will be a gap in the law since questions will arise as to how
all these allowances mentioned (RATA, clothing and laundry allowances,
subsistence allowance for marine officers and crew on board government vessels
and hospital personnel, etc.), which are not integrated into the standardized
salary, will thereafter be treated.

We therefore adjudge that these second category official may not
avail themselves of the RATA under
LOI No. 97. Their RATA shall be paid in accordance with
the provisions of the annual General
Appropriations Acts, if their positions are among those mentioned
therein. In yearly providing a uniform RATA for specified ranks, it is
presumed that the legislature has properly taken into consideration the
requirements of these positions.

The next question that arises is: What is the basis of the RATA
to be given after July 1, 1989 to the first category officials?

The petitioners postulate that since under Memorandum Circular
No. 57-87 they are entitled to RATA equivalent
to 40% of basic salary, then their RATA should accordingly be adjusted to 40%
of standardized salary.

The respondents meanwhile reiterate the position of the
Department of Budget and Management (DBM) that starting July 1, 1989, the RATA
is no longer based on 40% of basic salary but on the highest amount
of RATA received by the incumbent as
of June 30, 1989.

The resolution of this issue involves the proper interpretation
of the second sentence of Section 12, first paragraph:

“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.” (Underscoring ours)

The DBM and the respondents construed July 1, 1989 as a cut-off
date. According to them the highest
amount the officials are receiving as
of July 1, 1989 shall be the amount that shall
continue to be authorized.

We disagree with the foregoing interpretation and rule for the
petitioners. The date July 1, 1989 does
not serve as a cut-off date with
respect to the amount of RATA. 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. This given date
should not be interpreted as fixing the maximum amount of RATA to be received
by the official.

WHEREFORE, the petition is partly GRANTED. The disallowance of P826,131.60 representing
payment of RATA differentials to the officials enumerated under Memorandum
Circular No. 57-87 is hereby SET ASIDE. The disallowance of P246,456.14 representing payment of RATA to the officials enumerated under Memorandum
Circular No. 36-89 is AFFIRMED.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grino-Aquino,
Medialdea, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, and Melo, JJ., concur.