G.R. No. 119385 . August 5, 1999.
NATIONAL TOBACCO ADMINISTRATION represented herein by Administrator AMANTE SIAPNO, EVANGELISTA A. GARCIA, RICARDO BRIONES, CLARITA B. CASTRO, CRISTINA LOPEZ, JESUS C. BONDOC and ROSALINA C. CARINO, petitioners, vs. COMMISSION ON AUDIT, respondent.

FACTS

The National Tobacco Administration (NTA), a government-owned and controlled corporation, had been granting its officials and employees a Mid-Year Social Amelioration Benefit equivalent to one-and-a-half months of their basic salary even prior to the effectivity of Republic Act No. 6758 (the Salary Standardization Law) on July 1, 1989. From 1989 to 1993, this benefit was reduced to one month due to financial constraints. In May 1993, its nomenclature was changed to “educational assistance.” In February 1994 and January 1995, the Resident Auditor of NTA issued Notices of Disallowance for the payment of this benefit for calendar years 1993 and 1994, opining that the NTA had no statutory authority to grant it. The petitioners appealed to the Commission on Audit (COA), arguing that the benefit was authorized under Section 12 of R.A. 6758 as an additional compensation being received as of July 1, 1989, that its disallowance constituted an unauthorized diminution of pay, and that the recipients had acquired a vested right to it. On February 7, 1995, the COA denied the appeal, ruling that under Section 5.6 of Corporate Compensation Circular No. 10 (the implementing rules), the benefit, not being among the allowances mentioned in Sub-paragraphs 5.4 and 5.5, should have been discontinued effective November 1, 1989, and its payment was an illegal disbursement.

ISSUE

1. Whether the social amelioration or educational assistance benefit given prior to R.A. 6758 is authorized under the law.
2. Whether the disallowance of the said benefit is tantamount to diminution of pay.
3. Whether the individual petitioners have acquired a vested right over the benefit.

RULING

The Supreme Court granted the petition, set aside the COA decision, and lifted the disallowance.
1. On the authorization of the benefit: The benefit is authorized under Section 12 of R.A. 6758. The Court held that the second sentence of Section 12 explicitly provides that additional compensation being received by incumbents as of July 1, 1989, and not integrated into the standardized salary rates, shall continue to be authorized. The subject benefit, having been received prior to July 1, 1989, falls under this provision. The COA erred in relying on Section 5.6 of CCC No. 10, as an administrative rule like CCC No. 10 cannot amend or override the clear provision of the law it seeks to implement. Section 5.6, which orders the discontinuance of benefits not listed, is void for going beyond the law.
2. On diminution of pay: The disallowance constitutes an illegal diminution of compensation. The benefit, having been granted for a considerable length of time prior to R.A. 6758, had become part of the employees’ compensation package. Its removal would violate the constitutional prohibition against the diminution of compensation of public officials and employees.
3. On vested right: The petitioners acquired a vested right to the benefit. A vested right is a fixed, unalterable, and absolute right. The long-term and continuous grant of the benefit, even before the effectivity of R.A. 6758, created a vested right in favor of the recipients. The disallowance, which sought to recover benefits already paid and enjoyed, would be an illegal violation of such right.