TEODORO J. SANTIAGO, PETITIONER, VS. THE COMMISSION ON AUDIT, AND THE GOVERNMENT SERVICE INSURANCE SYSTEM, RESPONDENTS.

The basic issue presented in this case is the correct
interpretation of Executive Order No. 966, Section 9, providing as follows:

Sec. 9. Highest Basic
Salary Rate. – The compensation of salary or pay which may be used in
computing the retirement benefits shall be limited to the highest salary rate
actually received by an official/employee as fixed by law and/or indicated in
his duly approved appointment. This
shall include salary adjustments duly authorized and implemented by the presidential issuance(s) and budget
circular(s), additional basic compensation or salary indicated in an
appointment duly approved as an exception to the prohibition on additional or
double compensation, merit increases, and compensation for substitutionary
services or in an acting capacity. For
this purpose, all other compensation and/or fringe benefits such as per diems,
allowances, bonuses, overtime pay, honoraria hazard pay, flying time fees,
consultancy or contractual fees, or fees in correcting and/or releasing
examination papers shall not be considered in the computation of the retirement
benefits of an official/employee.

The question was raised by the petitioner in connection with the
computation of his retirement benefits which he claims was not made in
conformity to the above-quoted requirement.

The petitioner was employed in the Commission on Audit as State
Auditor IV with a monthly salary of P7,219.00. In 1988, he was assigned to the COA Auditing Unit at the Department of
Transportation and Communications and detailed to the Manila International
Airport Authority. On July 1, 1988, the
board of directors of the MIAA passed the following resolution:^[1]

RESOLUTION
NO. 88-70

RESOLVED, that, as recommended by Management, the designation of
Mr. Teodoro J. Santiago, Jr., as Assistant General Manager for Finance and
Administration, effective 15 August 1988, be approved, as it is hereby
approved, subject to the following conditions:

1.     He will retain his plantilla position in
COA;

2.     His compensation from MIAA, shall be the
difference between the salary of AGM for Finance and Administration (MIAA) and
that of State Auditor IV (COA); and

3.     His retirement benefits shall be chargeable
against COA.

This resolution was duly communicated to the COA on July 11,
1988, with a request for the petitioner’s indefinite detail to the MIAA. In reply, Chairman Eufemio C. Domingo wrote
MIAA on July 14, 1988, as follows:^[2]

x x x please be informed that we are authorizing such detail
through appropriate office order up to February 15, 1989. The order includes authority to collect
representation and transportation allowances (RATA) of P1,200.00 each month and
other allowances attendant to the position chargeable against the funds of the
NAIAA.

As regards your proposal that Mr. Santiago be allowed to collect the difference in salary of his
position in the COA as State Auditor
IV and his designated position as Assistant General Manager thereat, likewise
chargeable against the funds of that office, this Commission interposes no
objection to the proposal to pay him the difference between his present monthly
salary of P7,219.00 and that of Assistant General Manager which reportedly
amounts to P13,068.00 a month or
a monthly difference of P5,849.00, provided that he is formally
designated (not appointed) Assistant General Manager by the Board of Directors,
NAIAA, and that payment of his salary differential is approved by the same
office. xxx xxx xxx.

On August 10, 1988, Secretary Reinerio O. Reyes, concurrently
chairman of the MIAA board of directors, issued an office order formally
designating the petitioner as Acting Assistant General Manager for Finance and
Administration, effective August 16, 1988.^[3]

The petitioner served in
this capacity and collected the differential salary of P5,849.00 plus his
salary of P7,219.00 for a total compensation of P13,068.00. He received this compensation until December
5, 1988, when he was transferred to the Presidential Management Staff under COA
Office Order No. 88-11448 dated December 6, 1988.

On March 1, 1989, the petitioner retired after working in the
government for 44 years.

In computing his retirement benefits, the Government Service
Insurance System used as basis the amount of P13,068.00, considering this the highest
basic salary rate received by the petitioner in the course of his employment.^[4]
The COA disagreed, however, and paid his retirement benefits on the basis of
only his monthly salary of P7,219.00 as State Auditor IV.^[5]

The petitioner requested recomputation based on what he claimed
as his highest basic salary rate of P13,068.00. This was denied on December 8, 1989, and he was so notified on
February 5, 1990. On March 7, 1990, he
came to this Court to seek reversal of the decision of the COA on the ground of
grave abuse of discretion.

We note at the outset that there is no dispute regarding the
legality of the petitioner’s occupying the second position in the MIAA and
receiving additional compensation for his services therein. As the Solicitor General observed,
“What the petitioner was receiving from the MIAA was the additional
compensation allowed under Section 17 of Act No. 4187 which, in turn, is
allowed under Section 8, Paragraph B, Article IX of the Constitution.”^[6]

In Quimzon v. Ozaeta,^[7] this
Court held that double appointments are not prohibited as long as the positions
involved are not incompatible, except that the officer or employee appointed
cannot receive additional or double compensation unless specifically authorized
by law. The additional compensation
received by the petitioners is not an issue in the case at bar because of its
express approval by the COA and the admission of the Solicitor General that it
is allowed under the cited provision.

More specifically, Section 17 of Act No. 4187 provides:

Any existing act, rule or order to the contrary notwithstanding, no
full time officer or employee of the government shall hereafter receive
directly or indirectly any kind of additional or extra compensation or salary
including per diems and bonuses from any fund of the government, its dependencies, and semi-government entities or
boards created by law except:

(1) Officers serving as chairman or members of entities
and enterprise organized, operated, owned or controlled by the government, who
may be paid per diem for each meeting actually attended or when an official
travel;

(2) Auditors and
accountants;

(3) Provincial and municipal treasurers and
their employees;

(4) Employees serving as observers of the
Weather Bureau; and

(5) Those authorized to receive extra or
additional compensation by virtue of the provision of this Act. (Underscoring supplied)

The Solicitor General
argues, albeit not too strongly, that the additional compensation received by
the petitioner was merely an honorarium and not a salary. As a mere honorarium, it would not fall
under the provision of Section 9 and so should not be added to his salary in
computing his retirement benefits.

We cannot accept this contention. An honorarium is defined as something given not as a matter of
obligation but in appreciation for services rendered, a voluntary donation in
consideration of services which admit of no compensation in money.^[8]
The additional compensation given to the petitioner was in the nature of a
salary because it was received by him as a matter of right in recompense for
services rendered by him as Acting Assistant General Manager for Finance and
Administration. In fact, even Chairman
Domingo referred to it in his letter dated July 14, 1988, as the petitioner’s
“salary differential.”

The Solicitor General’s main argument is that the petitioner
cannot invoke Section 9 because he was not appointed to the second position in
the MIAA but only designated thereto. It is stressed that under the said provision, “the compensation of
salary or pay which may be used in computing the retirement benefits shall be
received by an official employee as fixed by law and/or indicated in his duly approved
appointment.” The petitioner’s additional salary was fixed not in a duly
approved appointment but only in a designation.

Belittling this argument, the petitioner maintains that there is
no substantial distinction between appointment and designation. He cites Mechem, who defines appointment as
“the act of designation by the executive officer, board or body, to whom
that power has been delegated, of the individual who is to exercise the
functions of a given office.”^[9] He
also invokes Borromeo v. Mariano,^[10]
where this Court said that “the term ‘appoint,’ whether regarded in its
legal or in its ordinary acceptation, is applied to the nomination or
designation of an individual.”

Strictly speaking, there is an accepted legal distinction between
appointment and designation. While
appointment is the selection by the proper authority of an individual who is to
exercise the functions of a given office, designation, on the other hand,
connotes merely the imposition of additional duties, usually by law, upon a person
already in the public service by virtue of an earlier appointment (or election).^[11]
Thus, the appointed Secretary of Trade and Industry is, by statutory
designation, a member of the National Economic and Development Authority.^[12]
A person may also be designated in an acting capacity, as when he is called upon to fill a
vacancy pending the selection of a permanent appointee thereto or, more
usually, the return of the regular incumbent. In the absence of the permanent Secretary, for example, an undersecretary
is designated acting head of the department.^[13]

As the Court said in Binamira v. Garrucho:^[14]

Appointment may be defined as the selection, by the authority
vested with the power of an individual who is to exercise the functions of a
given office. When completed, usually
with its confirmation, the appointment results in security of tenure for the
person chosen unless he is replaceable at pleasure because of the nature of his
office. Designation, on the other hand,
connotes merely the imposition by law of additional duties on an incumbent
official, as where, in the case before
us, the Secretary of Tourism is designated Chairman of the Board of Directors
of the Philippine Tourism Authority, or where, under the Constitution, three
Justices of the Supreme Court are designated by the Chief Justice to sit in the
Electoral Tribunal of the Senate or the House of Representatives. It is said that appointment is essentially
executive while designation is legislative in nature.

Nevertheless, we agree with the petitioner that in the law in
question, the term “appointment” was used in a general sense to include the term “designation.” In
other words, no distinction was intended between the two terms in Section 9 of
Executive Order No. 966. We think this
to be the more reasonable interpretation, especially considering that the
provision includes in the highest salary rate “compensation for
substitutionary services or in an acting capacity.” This need not always
be conferred by a permanent
appointment. A contrary reading would,
in our view, militate against the letter of the law, not to mention its spirit
as we perceive it. That spirit seeks to
extend the maximum benefits to the retiree as an additional if belated
recognition of his many years of loyal and efficient service in the government.

As thus interpreted, Section 9 clearly covers the petitioner, who
was designated Acting Assistant General Manager for Finance and Administration
in the office order issued by Secretary Reyes on August 10, 1988. The position was then vacant and could be
filled either by permanent appointment or by temporary designation. It cannot be said that the second position
was only an extension of the petitioner’s office as State Auditor IV in the
Commission on Audit as otherwise
there would have been no need for his designation thereto. The second office was distinct and separate
from his position in the Commission on Audit. For the additional services he rendered for the MIAA, he was entitled to
additional compensation which, following the letter and spirit of Section 9,
should be included in his highest basic salary rate.

It is noteworthy that the petitioner occupied the second office
not only for a few days or weeks but for more than three months. His designation as Acting Assistant General
Manager for Finance and Administration was not a mere accommodation by the MIAA. On the contrary, in his letter to
Chairman Domingo requesting the petitioner’s services, MIAA General Manager
Evergisto C. Macatulad said, “Considering his qualifications and work
experience, we believe that a finance man of his stature and caliber can be of
great help in the efficient and effective performance of the Airport’s
functions.”

Retirement laws should be interpreted liberally in favor of the
retiree because their intention is to provide for his sustenance, and hopefully
even comfort, when he no longer has the stamina to continue earning his
livelihood. After devoting the best
years of his life to the public service, he deserves the appreciation of a grateful
government as best concretely expressed in a generous retirement gratuity
commensurate with the value and length of his services. That generosity is the least he should
expect now that his work is done and his youth is gone. Even as he feels the weariness in his bones
and glimpses the approach of the lengthening shadows, he should be able to
luxuriate in the thought that he did his task well, and was rewarded for it.

WHEREFORE, the petition is GRANTED. The challenged resolution is SET ASIDE and judgment
is hereby rendered DIRECTING the computation of the petitioner’s retirement
benefits on the basis of his Highest Basic Salary Rate of P13,068.00. It is so ordered.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras,
Feliciano, Padilla, Bidin, Sarmiento, Griño-Aquino, Medialdea, Regalado, and Davide, Jr., JJ., concur.

Gancayco, J., on leave.

^[1]
Rollo, p. 20.

^[2]
Ibid., p. 22.

^[3]
Id., p. 24.

^[4]
Id., p. 26.

^[5]
id., pp. 27-28.

^[6]
Id., p. 65.

^[7]
98 Phil. 705.

^[8]
McDonald v. Napier, 14 Ga 89.

^[9]
Public Office and Officers, Sec. 102.

^[10]
41 Phil. 322.

^[11]
Binamira v. Garrucho, 188 SCRA 188; Gonzales, Political Law Review
(1969), pp. 184-185.

^[12]
Sec. 5, Chapter 2(C), Title II of Book V, Revised Administrative Code of 1987.

^[13]
Sec. 10(5), Chapter 2 of Book IV, Revised Administrative Code of 1987.

^[14]
188 SCRA 158-159.