Title
Board of Trustees of the Government Service Insurance System vs. Velasco
Case
G.R. No. 170463
Decision Date
Feb 2, 2011
GSIS employees challenged denial of benefits under preventive suspension; SC ruled step increments valid post-suspension, upheld presumption of innocence, voided discriminatory provisions.
board of trustees
government service insurance system
carpio
A

Case Summary (G.R. No. 170463)

Factual Background

Respondents participated in a demonstration by some GSIS employees that criticized alleged corruption within the GSIS and sought the ouster of Winston F. Garcia. The GSIS charged respondents administratively and placed them under preventive suspension for ninety days beginning 23 May 2002. After suspension, respondent Molina requested implementation of his step increment by letter dated 4 April 2003, and the request was denied on 22 April 2003 by Senior Vice President Concepcion L. Madarang who relied on GSIS Board Resolution No. 372 adopting the new GSIS salary structure and supplemental guidelines on step increment and promotion. Respondents also sought to avail themselves of benefits under GSIS Board Resolution No. 306 granting a Christmas raffle; that request was likewise denied because of their pending administrative cases.

Administrative Policy Developments

On 27 August 2003, the GSIS Board adopted GSIS Board Resolution No. 197, which provided that an employee with a pending administrative case shall be disqualified, during the pendency of the case, from promotion, step increment, performance-based bonus, and other benefits and privileges. Resolution No. 372 contained a specific rule that a step increment adjustment of an employee on preventive suspension shall be withheld until a decision on the case has been rendered.

Trial Court Proceedings

Respondents filed a petition for prohibition with prayer for a writ of preliminary injunction in the Regional Trial Court, Manila, Branch 19 on 14 November 2003. The trial court denied petitioners’ motion to dismiss and on 16 January 2004 issued a writ of preliminary injunction which it later made permanent in its 24 September 2004 Decision. The trial court held that withholding employee benefits solely because of a pending administrative case deprived respondents of benefits without due process, punished them without hearing, and violated the presumption of innocence. The trial court also accepted an ONAR certification that the challenged GSIS Board resolutions were not filed with the UP Law Center and concluded that, by virtue of Sections 3 and 4, Chapter 2, Book 7 of the Revised Administrative Code of 1987, such unfiled rules were ineffective. Petitioners’ motion for reconsideration was denied on 7 October 2005.

Issues Presented to the Supreme Court

Petitioners contended that (1) the Civil Service Commission (CSC), not the trial court, had jurisdiction over the subject matter; (2) the special civil action for prohibition against the GSIS Board and its officers was outside the territorial jurisdiction of RTC-Manila, Branch 19, because the GSIS principal office was in Pasay City; (3) internal rules need not be registered with the UP Law Center and thus were effective despite nonfiling; (4) a regulation disqualifying government employees with pending administrative cases from step increment and Christmas raffle benefits was not unconstitutional; and (5) the trial court exceeded its remedial powers by nullifying board resolutions and making a preliminary injunction permanent without ordering the issuance of a writ of prohibition.

The Supreme Court’s Jurisdiction and Venue Analysis

The Court examined the nature of the action and the rules on petitions for prohibition. Because a petition for prohibition under Rule 65, Rules of Court may be filed in a proper court where the acts or omissions of a corporation, board or officer in the territorial area are subject to enforcement, and because the petition was a personal action for prohibition, the Court held that the Regional Trial Court of Manila had subject matter jurisdiction. The Court further held that venue was proper in Manila under Section 2, Rule 4 of the Rules of Court since respondent Velasco resided in Manila and the action could be brought where the plaintiff resided. The Court relied on BP 129, Sec. 21(1) to observe that writs issued by a regional trial court are enforceable in any part of the judicial region, including Pasay City. Accordingly, the trial court did not err in taking cognizance of the petition.

Effectivity and Filing with the UP Law Center

The trial court declared the challenged resolutions ineffective because they were not filed with the UP Law Center as required by certain provisions of the Revised Administrative Code. The Supreme Court corrected the trial court on this point. The Court emphasized that not all agency rules must be filed with the UP Law Center; only those of a general or permanent character that affect the public must be registered. Interpretative and internal regulations that regulate only an agency’s personnel need not be filed. The Court therefore held that GSIS Board Resolutions Nos. 197, 306, and 372, which pertained to internal personnel matters, did not require filing with the UP Law Center and that the trial court erred insofar as it declared them ineffective for nonfiling.

Step Increment Rule and the Effect of Preventive Suspension

The Court addressed the substance of the challenged provisions regarding step increment. It analyzed Joint Circular No. 1, series of 1990 which conditioned a one-step increment on three years of continuous satisfactory service in the same position. The Court noted CSC authorities that a period of suspension imposed as a penalty constitutes a gap in continuity of service and delays the grant of step increment by the suspension period. The Court distinguished a punitive suspension from preventive suspension, observing that preventive suspension under Secs. 51 and 52, Revised Administrative Code of 1987, and under Section 24 of Rule XIV of the Omnibus Rules, is not a penalty but a preventive measure pending investigation. The Court reasoned that, because preventive suspension is not punitive, it should be treated like approved vacation leave without pay for computation of the three-year requirement: the employee’s entitlement to a step increment persists and the grant is delayed only by the actual number of days of the preventive suspension, which in practice will not exceed ninety days. Applying these principles to the facts, the Court found that respondents were on preventive suspension from 23 May 2002 to 21 August 2002 and that they should have been reinstated at the end of that period and entitled to the step increment after the same number of days of suspension had been added to their qualifying service.

Presumption of Innocence and Relief Limited to Step Increment Provisions

The Court affirmed the trial court’s conclusion that respondents enjoyed the presumption of innocence while their administrative cases remained pending and that denial of benefits solely by reason of pending charges impermissibly imposed punishment without hearing. The Court, however, limited the remedy. It recognized that the trial court had declared Resolutions Nos. 197 an

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