G.R. No. 16763 - Coso vs. Deza

Case Summary (G.R. No. 16763)

Procedural History

Diaz filed an administrative complaint with the Office of the Ombudsman (OMB‑00‑89‑0049) against U.P. officials for alleged RA 3019 violations; the Ombudsman dismissed the complaint for lack of merit. Diaz sought certiorari in the Supreme Court twice; one petition was dismissed for procedural noncompliance and the other (G.R. No. 89207) was dismissed on the merits, noting absence of manifest partiality, bad faith, or gross negligence. Separately, Diaz filed an action for damages with the Regional Trial Court (RTC), Branch 71, Pasig (Civil Case No. 58397). The RTC rendered judgment in favor of Diaz (April 17, 1996), awarding unpaid salaries and damages for unreasonable delay; it later modified its decision to absolve Dean Encanto of liability. The Court of Appeals reversed the RTC (April 28, 2005), largely deleting damages and drastically reducing salary awards. Diaz petitioned the Supreme Court (Rule 45), which denied the petition but modified the Court of Appeals’ disposition regarding withheld salaries.

Undisputed Facts

Diaz taught a full load in the second semester AY 1987–1988, then took sick leave November 23, 1987–March 1, 1988; she returned March 2, 1988.
On May 3, 1988 Diaz applied directly to the U.P. President for sabbatical leave with pay for June 1988–May 1989. Initial departmental recommendation favored grant; the department chair later recommended that Diaz be granted any leave for which she qualified. Diaz indicated unwillingness to teach in a May 2, 1988 letter.
Chair Lazaro removed Diaz’s name from the final class schedule for the first semester AY 1988–1989 (June 6, 1988 start) without consulting Diaz; Diaz nevertheless received salary for June 1988.
Dean Encanto recommended denial of the sabbatical to the U.P. Secretary; Vice‑Chancellor and HR officials treated Diaz as AWOL until she officially reported for duty. Encanto instructed payroll withholding effective July 1, 1988; Diaz’s name was deleted from the payroll from September 1988 to January 1989.
Administrative processing involved reference slips among the Chancellor, VP for Academic Affairs, and the President’s office; Diaz was requested to submit background information but delayed doing so. The APCC reviewed the case July 21, 1988.
Diaz taught in the second semester AY 1988–1989 but did not claim salaries due to refusal to submit the Report for Duty form; she later submitted required forms and reappeared on payroll in July 1990 after a compulsory summer leave.

RTC Ruling (April 17, 1996; amended Sept. 17, 1996)

The RTC found that sabbatical leave is a privilege (not a right) but concluded Diaz was entitled to damages because the delay in resolving her sabbatical application was “unreasonable and unconscionable.” The RTC awarded unpaid salaries for specified periods and significant moral and exemplary damages and attorney’s fees, but later amended the judgment to absolve Dean Encanto of liability on the ground her function was recommendatory and she transmitted her recommendation within 18 days of receipt.

Court of Appeals Ruling (April 28, 2005)

The Court of Appeals reversed the RTC. It held (a) there was no negligence or bad faith in the denial of the sabbatical application because the grant of sabbatical is discretionary and subject to exigencies of the service (e.g., teaching shortages); (b) even if there was delay, Diaz herself contributed to it by not following procedural requirements and by refusing to furnish documentary requirements; and (c) the withholding of salaries was lawful because Diaz failed to comply with the University’s Report for Duty requirement. The CA deleted the awards for moral and exemplary damages and attorney’s fees and ordered only a modest payment (P21,879.64) as unpaid salaries and allowances; its denial of reconsideration was affirmed January 20, 2006.

Issues Presented to the Supreme Court

The core issue was whether the respondents (U.P. and individual officials) acted in bad faith in denying Diaz’s sabbatical application and in withholding her salaries. Diaz raised six assignments of error challenging the CA’s adoption of respondents’ explanations, its finding of lawful exercise of discretion, its treatment of salary withholding, its conclusion that respondents were not negligent so as to warrant damages, the CA’s computation of unpaid salaries, and the non‑finding of joint and several liability for damages.

Standard on Bad Faith and Burden of Proof

The Court reaffirmed that bad faith is a question of fact and that good faith is presumed; the party alleging bad faith bears the burden of proof. Malice or bad faith under Article 19 involves a dishonest purpose, conscious wrongdoing, or an intention to cause unjustifiable harm, and cannot be established by showing mere bad judgment or simple negligence.

Supreme Court’s Fact‑finding Posture and Exception to Rule 45 Limits

Although Rule 45 ordinarily does not permit reexamination of factual findings, the Supreme Court made an exception because the RTC and the Court of Appeals had substantially the same factual findings but reached divergent legal conclusions. The Court nevertheless treated bad faith as an evidentiary question which Diaz failed to prove.

Analysis: Sabbatical Leave Denial

The Court concluded: (1) sabbatical leave is a privilege and not a vested right; (2) multiple prior adjudications (the Ombudsman’s dismissal of the RA 3019 complaint and this Court’s dismissal of Diaz’s certiorari petitions) found no manifest partiality, bad faith, or gross negligence; (3) the CA correctly characterized the denial as a collegial administrative decision anchored on U.P. rules and the exigencies of service (teaching shortages); and (4) there was no credible evidence of deliberate delay motivated to injure Diaz. The Court emphasized that the processing delays were attributable in material part to Diaz’s own failure to follow usual procedures and to provide requested background information.

Analysis: Withheld Salaries and Report for Duty Requirement

First semester AY 1988–1989 (July 1–October 31, 1988): The Court found equity warranted payment of salaries for the semester in which Diaz’s name was dropped from the final class schedule without her prior knowledge or consent. Chair Lazaro removed the name, believing Diaz’s sabbatical would be approved and seeking to avoid mid‑semester course drops; Lazaro’s action was not in bad faith. Diaz had received salary for June 1988; the Court ordered payment for the remainder of that semester upon accounting and subject to deducting amounts already paid.
Periods when Diaz actually rendered service (November 1, 1988–May 31, 1989, and July 16, 1989–May 31, 1990): The Court held respondents lawfully withheld pay when Diaz refused to accomplish the University’s Report for Duty form, a standard and basic administrative requirement that the Ombudsman, the CA, and the RTC had upheld. The Court directed payment for those periods upon Diaz’s compliance with documentary requirements. The RTC’s prior denial of mandatory injunctions confirmed that the Report for Duty is a standard prerequisite to salary payment.

Damages, Attorney’s Fees, and Legal Interest

Damages and attorney’s fees: Because the Court found

Case Syllabus (G.R. No. 16763)

Nature of the Case and Relief Sought

Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Court, as amended, seeking reversal and setting aside of the Court of Appeals Decision dated April 28, 2005 and Resolution dated January 20, 2006 in CA‑G.R. CV No. 55165.
The petition challenges the Court of Appeals' reversal of the Regional Trial Court (RTC), Branch 71, Pasig City, Decision dated April 17, 1996 and Order dated September 17, 1996 in Civil Case No. 58397.
Claimant (petitioner) Elizabeth L. Diaz sought recovery of unpaid salaries, moral and exemplary damages, and attorney’s fees, alleging respondents acted in bad faith and/or negligently in denying her sabbatical leave and withholding salaries.

Undisputed Factual Background

Petitioner Elizabeth L. Diaz had been in the service of the University of the Philippines (U.P.) since 1963 and, in 1987, was an associate professor in the College of Mass Communication (CMC).
For the second semester AY 1987–1988, Diaz taught a full load of 12 units but after 2–3 weeks applied for sick leave effective November 23, 1987 until March 1, 1988 and returned on March 2, 1988 with a Report for Duty Form.
On May 3, 1988, Diaz filed a letter‑application directly to the U.P. Office of the President for a one‑year sabbatical leave with pay effective June 1988 to May 1989 for “rest, renewal and study.”
Initial recommendation by Cecilia Lazaro (Chair, Broadcast Department) was to grant the sabbatical; on May 10, 1988 Lazaro recommended instead that Diaz be granted any leave of absence she may be qualified for.
In a May 2, 1988 letter, Diaz indicated unwillingness to teach; Lazaro, considering prior experience of Diaz dropping courses mid‑semester, deleted Diaz’s name from the final schedule of classes for the 1st semester AY 1988–89 (beginning June 6, 1988).
Diaz received salary for June 1988, indicating sabbatical might be approved; thereafter Encanto (Dean) referred Diaz’s sabbatical application to U.P. Secretary recommending denial.
Encanto requested payroll hold of Diaz’s salary effective July 1, 1988 pending action because Diaz did not teach that semester; her name was deleted from payroll from September 1988 to January 1989.
On July 4, 1988, Tabujara recommended granting a leave without pay to enable CMC to hire a substitute; Abad and others reviewed and referred the matter up; Diaz was asked to provide a written historical background.
APCC reviewed the case on July 21, 1988 per Administrative Order No. 42; Diaz promised to give background information when reminded.
Vice Chancellor for Academic Affairs and HRDO Director instructed Encanto that until Diaz officially reported for duty and accomplished a Certificate/Report for Duty, she is considered AWOL.
Diaz taught in second semester AY 1988–89 but refused to submit the Report for Duty Form and thus did not claim salaries for some periods; she received salaries for June to July 15, 1989 but could not claim after July 15, 1989 until she complied with Report for Duty; her name was returned to payroll starting July 1990 after submission of Report for Duty following compulsory summer leave.

Administrative and Pre‑Supreme Court Remedies Pursued

On January 3, 1989, Diaz filed complaint with the Office of the Ombudsman (OMB‑0‑89‑0049) against Abad, Tabujara and Encanto under Section 3(e) of R.A. 3019, contesting legality of Report for Duty as prerequisite to salary payment.
Ombudsman on May 4, 1989 dismissed the complaint: found Diaz was rightfully considered on leave without pay for first semester AY 1988–89 and advised she accomplish the Report for Duty Form to establish date of actual return; suggested University could dispense with requirement and pay salaries from November 3, 1988 if possible.
Diaz filed certiorari petitions to the Supreme Court challenging the Ombudsman resolution: G.R. No. 88834 (dismissed for non‑compliance with Circular No. 1‑88) and G.R. No. 89207 (dismissed Aug. 31, 1989). The Supreme Court observed the Ombudsman found no manifest partiality, evident bad faith or gross inexcusable negligence by private respondents in denying sabbatical and requiring Report for Duty.

Civil Action in RTC (Pasig, Civil Case No. 58397) — Trial Court Findings and Relief

Diaz filed suit on July 18, 1989 against U.P., Abueva, Encanto, Tabujara and Abad seeking unpaid salaries for July 1, 1988 onward, moral and exemplary damages, and attorney’s fees alleging conspiracy/joint tortfeasors.
RTC Decision dated April 17, 1996 ruled in favor of Diaz and ordered, inter alia:
- Joint and several payment (except Abueva) of P133,665.50 representing unpaid salaries from July 1, 1988 to May 31, 1989 and July 16, 1989 to May 31, 1990, with legal interest from date of Decision.
- Joint and several payment (except University and Abueva) of P300,000 as moral damages.
- Joint and several payment (except University and Abueva) of P60,000 as exemplary damages.
- Joint and several payment (except University and Abueva) of reduced attorney’s fees amounting to P50,000.
- Dismissal of Tabujara’s counterclaims.
RTC characterized sabbatical leave as a privilege (not a right) but found petitioner entitled to that privilege and found delay in resolution of application unreasonable and unconscionable, thus awarding damages for delay.
RTC later, in Order dated September 17, 1996 denying respondents’ motions for reconsideration, amended its earlier decision to absolve respondent Encanto from liability on the ground her function was purely recommendatory and she transmitted her recommendation to Abueva within eighteen days of receipt.

Appeals to Court of Appeals — Decision and Rationale

Petitioner and respondents (including Encanto, Tabujara, Abad, U.P., Abueva) appealed to the Court of Appeals; Encanto’s brief was treated as incorporation/comment since she was absolved by RTC.
Court of Appeals trimmed the issue to whether U.P., Tabujara and Abad were negligent or acted in bad faith in denying sabbatical and withholding salaries.
Court of Appeals Decision promulgated April 28, 2005 reversed and set aside the RTC decision and rendered a new judgment:
- Dir
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