Title
Development Bank of the Philippines vs. Ronquillo
Case
G.R. No. 204948
Decision Date
Sep 7, 2020
Former DBP employees claimed COLA and AA after R.A. No. 6758 integrated allowances into salaries. SC ruled integration valid, dismissing mandamus for lack of legal basis.
mandamus
standardized salary rates
employees
A

Case Summary (G.R. No. 204948)

Antecedent Circumstances: COLA and AA Before and After R.A. No. 6758

On May 22, 1985, the DBP Executive Committee approved Resolution No. 0236, granting additional COLA to DBP officials and employees, with different monthly amounts depending on their monthly basic salary. On April 13, 1988, the DBP Board of Directors issued Resolution No. 0210, granting COLA of P200.00 per month to all bank personnel effective January 1, 1988.

On July 1, 1989, Congress enacted R.A. No. 6758, the Compensation and Position Classification Act of 1989. Section 12 of the law provided that all allowances, subject to specific exceptions enumerated therein, were to be deemed included in the standardized salary rates prescribed, while certain other additional compensation being received by incumbents as of July 1, 1989, but not integrated into standardized salary rates, could continue to be authorized.

To implement R.A. No. 6758, the DBM issued Corporate Compensation Circular (CCC) No. 10 on October 2, 1989, which discontinued allowances and fringe benefits granted on top of basic salary effective 1 November 1989, and characterized any subsequent payments for such allowances as illegal disbursements of public funds.

In response to R.A. No. 6758 and DBP’s implementation through CCC No. 10, DBP discontinued the payment of COLA to its officials and employees.

Later, on August 12, 1998, the Court en banc in De Jesus, et al. v. Commission on Audit, et al. declared CCC No. 10 ineffective and unenforceable for lack of publication.

Subsequent DBP Programs and Resolutions: ERIP, COLA for a Covering Period, and AA for Another Period

Sometime in 1999, DBP offered an Early Retirement Incentive Program (ERIP) under which employees who availed of early retirement received additional cash benefits termed “gratuities” in consideration for their early retirement. Some respondents availed of the ERIP and received these gratuities. Some others retired under regular retirement laws, resigned, were dismissed, or remained employed as of May 9, 2003.

On May 9, 2003, DBP issued Resolution No. 0137, granting COLA to the personnel concerned covering the period July 1, 1989 to February 28, 1999, to enable regular employees to pay off soft loans granted under the Provident Fund in June 2002.

On November 16, 2005, DBP, through its Executive Committee, issued Resolution No. 0151, granting Amelioration Allowance (AA) to DBP employees except retirees or resignees who had executed documents waiving their claims against DBP.

The respondents repeatedly made written and verbal demands for back payment of COLA and AA. DBP, through its Chief Legal Counsel, issued a letter on June 4, 2008 denying the claims.

The Mandamus Petition in the RTC: Claims for Back Payment of COLA and AA

On July 24, 2008, the respondents filed a petition for writ of mandamus against DBP under Section 3, Rule 65 of the 1997 Rules of Civil Procedure in the Regional Trial Court (RTC) of Quezon City, Branch 98, docketed as Special Civil Action No. Q-08-63099, to enforce their alleged rights to back payment of COLA and AA.

On September 22, 2010, the RTC rendered a Decision. It denied and dismissed the petition insofar as respondents who had availed of the ERIP, holding that their quitclaims barred their claims. As to the remaining respondents, the RTC granted the petition, ruled that they were entitled to COLA and AA, and ordered DBP and its officials to settle the claims, pay legal interest on the differentials, pay attorney’s fees of 20% or not less than Php20,000.00, and pay costs of suit. The RTC thus found that mandamus could be used to compel DBP to grant the claimed back benefits, subject to the ERIP quitclaim bar for the ERIP-availing respondents.

CA Proceedings and Modification: Recognition of ERIP Beneficiaries’ Entitlement and Partial Dismissal for Lack of Cause of Action

Both parties appealed to the CA. On January 17, 2012, certain respondents and DBP filed a partial satisfaction of judgment and a joint motion for partial withdrawal of appeal, alleging that they had received payment corresponding to a complete settlement. The CA indicated that the motion would be resolved upon the decision.

On June 6, 2012, the CA promulgated its Decision in CA G.R. SP. No. 118640, modifying the RTC ruling. The CA held that respondents who availed of the ERIP were likewise entitled to COLA and AA. It reasoned that COLA and AA were not integrated into the salaries of the employees, and that quitclaims did not necessarily operate as a waiver of recovery.

The CA, however, dismissed the petition with respect to employees who were still employed with DBP as of May 9, 2003 for lack of cause of action, explaining that DBP Board Resolution No. 0137 had granted them COLA. Similarly, it dismissed for lack of cause of action the claim for AA of those still employed as of November 16, 2005, because DBP Board Resolution No. 0151 had already been paid.

The CA’s final disposition modified the RTC in a manner consistent with these conclusions, including an order that release, quitclaim, and waiver executed by certain respondents be treated as partial satisfaction of judgment, and it affirmed the attorney’s fees and costs awarded by the RTC.

DBP moved for reconsideration, but the CA denied it in a Resolution dated December 19, 2012. DBP then filed the Rule 45 petition before the Supreme Court.

The Sole Issue Framed by DBP and the Doctrine Applied by the Court

DBP argued that the CA failed to consider the Court’s ruling in Gutierrez, et al. v. Dep’t. of Budget and Mgm’t., et al.. The Supreme Court treated the sole issue as whether respondents were entitled to payment of COLA and AA after the effectivity of R.A. No. 6758 and CCC No. 10.

The Court held that it had long settled that all kinds of allowances—except those specifically enumerated in Section 12 of R.A. No. 6758—are deemed integrated in the standardized salaries of government employees, including personnel of government-owned and controlled corporations and government financial institutions. It further held that under R.A. No. 6758, COLA and AA were integrated into the standardized salary rates, so back payment to former employees of DBP was unauthorized.

Analysis Anchored on Gutierrez and the Characterization of COLA and AA Within Section 12 Integration

The Supreme Court relied on its earlier and exhaustive analysis in Gutierrez, et al. v. Dep’t. of Budget and Mgm’t., et al., particularly on the meaning and operation of Section 12. The Court emphasized that Section 12 deemed “all allowances” integrated into standardized salary rates, except enumerated exceptions and also subject to DBM’s authority to identify additional compensation that could remain non-integrated. It explained that while Section 12 could be self-executing for items enumerated as exclusions, DBM needed to identify—through implementing issuances—any “catch-all” additional compensation outside the explicit list that could be treated as non-integrated.

On the specific point of COLA, the Court’s discussion in Gutierrez distinguished COLA from allowances that are meant to reimburse employees for expenses incurred in the performance of official duties. The Court characterized COLA as a benefit intended to cover increases in the cost of living, and thus as a category that falls within the general integration rule rather than within the enumerated exceptions.

The Court reiterated that its rulings had consistently treated allowances not expressly included among the non-integrated exceptions in Section 12 as barred after R.A. No. 6758. It cited later reiterations of the same approach in Abellanosa, et al. v. Commission on Audit et al., and Land Bank of the Philippines v. Naval, Jr., and also referenced the policy explanation in Maritime Industry Authority v. Commission on Audit that Section 12 aimed to standardize salary rates by doing away with multiple allowance packages that created differences in compensation.

Applying the doctrine of stare decisis et non quieta movere, the Court ruled that it had no alternative but to deny payment of COLA and AA on top of basic salary from July 1, 1989 because COLA and the claimed allowances were not expressly excluded under Section 12 and because COLA was not granted to reimburse expenses incurred in official duty.

Rejection of the “De Jesus” Publication Theory

The respondents argued that the nullification of DBM-CCC No. 10 in De Jesus meant that COLA and AA were not integrated into standardized salary rates. The Court rejected this position.

It held that the invalidation or nullity of CCC No. 10 was irrelevant to the validity and effectivity of R.A. No. 6758 itself. The Court cited the reasoning in Land Bank of the Philippines v. Naval, Jr. and other related rulings, including the doctrine that R.A. No. 6758 could be implemented regardless of the later declaration of nullity of CCC No. 10, because nothing in De Jesus suggested suspension of the effectivity of R.A. No. 6758 pending publication.

The Court further invoked the statutory construction principle that statutory provisions control the implementing regulations, and that the validity of a statute should not be made to depend on the validity of rules and regulations issued pursuant thereto. It also held that DBM action was not required for integration under Section 12 when the item in question fell under the general rule of integration, and that DBM’s issuance would be required only to identify additional non-integrated allowances falling within the delegated “catch-all” authority.

The Court also addressed the respondents’ theory in relation to publication. While it acknowledged that publication is ordinarily required as a condition precedent to the effectivity of laws and, likewise, of administrative rules and regulations that enforce delegated law, it held that the integration of allowances such as COLA and AA into standardized salary rates was not dependent on the publication of CCC No. 10. Their integrati

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