G.R. No. 91860 - Tejada vs. Domingo

Petitioners, Roseo U. Tejada and Radito C. Ching, were senior clerks of the Commission on Audit (COA) assigned respectively to the auditing units of the Philippine National Bank (PNB) and the Central Bank (CB).
Prior to the effectivity of Republic Act No. 6758, their gross monthly compensation included not only their basic salary and cost of living allowance but also extra emoluments (such as bank equity pay, longevity pay, amelioration pay, and meal allowance) provided by the respective agencies to which they were assigned.
Only the basic salary and cost of living allowance (totaling P2,323.00) were considered part of their official compensation as COA personnel.

Republic Act No. 6758, also known as the Compensation and Position Classification Act of 1989, introduced significant changes in the compensation structure for government employees, particularly those of the COA.
Section 18 of the Act stated that in order to preserve the independence and integrity of the COA, its officials and employees were prohibited from receiving any additional compensation—including salaries, honoraria, bonuses, allowances, or other emoluments—from any government entity, local government unit, government-owned or controlled corporations (GOCCs), and government financial institutions, except if paid directly by the COA out of its appropriations and contributions.

On August 24, 1989, the respondent, acting as Chairman of the COA, issued a memorandum interpreting and implementing Section 18. The memorandum provided that, effective July 1, 1989, all additional emoluments previously granted by other agencies would be removed from the payroll of COA officials and employees.
This interpretation directly affected the extra benefits that petitioners received from the PNB and the CB.
Petitioners, along with other COA personnel, sent a letter on September 27, 1989, requesting that their extra allowances be reconsidered or at least factored in during the computation of the standardized salary rates.
A subsequent memorandum issued on October 27, 1989, by the respondent, effectively denied the request, resulting in the reduction of petitioners’ compensation to the base salary of P2,323.00.

Dissatisfied with the memorandum and the resulting diminution of their gross compensation, the petitioners initiated a special civil action for certiorari with prohibition and mandamus on February 7, 1990.
Their petition sought to annul and set aside what they described as the “erroneous, arbitrary, wrongful and illegal interpretation and implementation” of Section 18 of RA No. 6758.
They raised two primary issues in their petition regarding the implications of Section 18 on their compensation and the source of payment for their extra allowances.

Petitioners contended that under Sections 12 and 17 of RA No. 6758, their gross compensation should include the extra emoluments formerly granted by GOCCs, which they argued were considered part of their overall compensation package.
They asserted that these extra allowances were, or should be, paid directly by the COA out of its appropriations and contributions, as had been the longstanding practice pursuant to policies established by Presidential Decree No. 1445 and later reinforced by Executive Order No. 19.
Conversely, the respondent, represented by the Office of the Solicitor General, argued that Section 18 was unambiguous in prohibiting the receipt of additional compensation from any external agency, and stressed that the extra emoluments were neither a matter of right nor legally sustainable.

The respondent’s position was bolstered by references to other provisions and executive issuances, such as those found in Presidential Decree No. 1445 and Executive Order No. 19, which mandated that COA personnel be paid directly by the COA to avoid conflicts of interest and to preserve the institution’s independence.
Additional legislative instruments and budgetary circulars (e.g., Memorandum Order No. 177 and Corporate Budget Circular No. 15) were cited to rationalize the compensation scheme, emphasizing that allowances beyond the standardized salary rates were intended only for organic personnel of profit-making and financially viable GOCCs, and not for COA personnel assigned to them.
A concurring and dissenting opinion, notably by Judge Gutierrez, Jr., raised concerns over the abrupt reduction of benefits and called for a more humane and gradual transition, though this view did not prevail in the final decision.

Whether Section 18 of Republic Act No. 6758 requires or even authorizes the diminution of the gross compensation of COA personnel, notwithstanding Sections 12 and 17 of the same law.

This included an examination of whether the additional allowances and fringe benefits previously received constituted part of the statutory gross compensation.

Whether all the extra allowances, emoluments, and fringe benefits that petitioners had been receiving before the effectivity of RA No. 6758 were paid directly by the COA out of its own appropriations and contributions.

The determination of the source of such payments was critical in evaluating the legality of the reduction imposed by the respondent’s memorandum.