G.R. No. 104158 November 6, 1992
HON. GEMILIANO LOPEZ, JR., in his capacity as Mayor of Manila; EUFEMIA DOMIGUEZ, in her capacity as City Budget Officer; HERMINIO ARCEO, in his capacity as Chairman, Committee for Retirement Gratuity and Terminal Leave Pay of the Office of the City Treasurer of Manila; and HON. ANTHONY ACEVEDO, in his capacity as City Treasurer of Manila, petitioners, vs. HON. COURT OF APPEALS and GALICIANO P. MANAPAT, respondents.

FACTS

Private respondent Galicano Manapat first retired on February 29, 1972, as Chief of the Legal Division of the Office of the Municipal Board of Manila under R.A. No. 1616 , as amended, after 20 years of service, receiving P24,479.02. He was reemployed by the City of Manila in April 1977 as Secretary of the City of Manila Board of Tax Assessment Appeals. He served until reaching the compulsory retirement age of 65 on June 27, 1989, but his service was extended for six months until December 27, 1989. During this extension, the Salary Standardization Law ( R.A. No. 6758 ) took effect on July 1, 1989, increasing his monthly salary from P3,993.33 to P11,385.00. Upon expiration of his extended service, Manapat applied for retirement under R.A. No. 1616 , as amended. The GSIS approved his application on April 6, 1990, initially based on his old salary, resulting in a net gratuity of P154,795.02 after deducting his previous retirement pay. On May 16, 1990, the GSIS adjusted the claim to conform with his last standardized salary, resulting in a total collectible retirement gratuity of P486,634.84. The City of Manila’s Committee on the Settlement of Claims for Retirement Gratuity and Terminal Leave Pay refused to act on the claim, citing an existing policy that an employee who has reached age 65 must retire under R.A. No. 660 , not R.A. No. 1616 . The City Legal Officer opined that the City had discretionary authority to allow or disallow a claim under R.A. No. 1616 , as retirement under that law was optional and payment was subject to fund availability. The City Mayor subsequently denied the request due to financial constraints. Manapat filed a special civil action for mandamus in the Regional Trial Court, which was dismissed. The Court of Appeals reversed the trial court and issued a writ of mandamus ordering petitioner officials to pay the retirement claim, plus legal interest, and awarded moral damages and attorney’s fees.

ISSUE

1. Whether a government employee who has reached the compulsory retirement age of 65 years may opt to retire under R.A. No. 1616 , as amended, or is entitled only to retirement benefits under the mandatory retirement clause of R.A. No. 660 .
2. Whether the City of Manila as employer may be compelled to pay the retirement benefits of its employees under R.A. No. 1616 , notwithstanding lack of available funds for that purpose.

RULING

1. Yes. A government employee who has reached the compulsory retirement age of 65 years may opt to retire under R.A. No. 1616 , as amended, provided he has rendered at least 20 years of total service, the last three years of which are continuous. The compulsory retirement provision in Section 12(e) of C.A. No. 186 , as amended, does not preclude the application of the optional retirement provision in Section 12(c) ( R.A. No. 1616 ). The law grants the employee the option to choose under which retirement law to retire, provided he qualifies under its specific requirements. Since Manapat had rendered a total of 35 years of government service at his second retirement, he qualified for optional retirement under R.A. No. 1616 . The City’s policy requiring retirement under R.A. No. 660 for those aged 65 cannot override the clear provisions of the law granting the employee the option.
2. Yes. The City of Manila may be compelled to pay the retirement benefits under R.A. No. 1616 . The provision that the gratuity is payable by the employer from “any unexpended items of appropriations or savings in its appropriations” does not make payment contingent upon the availability of funds in an absolute sense. It merely designates the fund source. The obligation to pay retirement benefits is mandatory once the employee qualifies under the law. Lack of funds is not a valid excuse for the government to avoid its contractual obligation arising from law. The award of moral damages was deleted as such damages are not recoverable in a mandamus suit against government officials acting in their official capacity. Attorney’s fees were properly awarded as private respondent was compelled to litigate to protect his interest.