G.R. No. 187257 & 187776 February 7, 2017
REPUBLIC OF THE PHILIPPINES, et al. vs. HON. LUISITO G. CORTEZ, et al. / ROLANDO G. ANDAYA, et al. vs. HON. LUISITO G. CORTEZ, et al.

FACTS

Respondents, representing the National Power Corporation (NAPOCOR) employee unions, filed a Petition for Mandamus to compel NAPOCOR to pay Cost of Living Allowance (COLA) and Amelioration Allowance (AA) for the period July 1, 1989 to March 16, 1999. The Regional Trial Court granted the petition, ordering payment of over ₱6.4 billion in back allowances plus interest. The petitioners, the Republic and the Department of Budget and Management (DBM), appealed. The core dispute stemmed from the implementation of Republic Act No. 6758 , the Compensation and Position Classification Act of 1989, which standardized salaries and integrated allowances into basic pay. A key implementing circular, DBM-CCC No. 10, which provided for this integration, was declared ineffective until its publication on March 16, 1999. This created a “legal limbo” where the integration was not legally operative.

ISSUE

Whether NAPOCOR employees are entitled to receive COLA and AA for the period from July 1, 1989 to March 16, 1999, despite the enactment of RA 6758 and the subsequent adoption of a new compensation plan for NAPOCOR under Republic Act No. 7648 .

RULING

No. The Supreme Court reversed the trial court’s decision. The legal logic proceeds from the principle of non-diminution of pay. While the ineffectiveness of DBM-CCC No. 10 created a legal limbo for government employees generally, NAPOCOR’s situation was distinct. Congress, through RA 7648 in 1993, authorized a new, separate compensation plan for NAPOCOR employees to make their pay competitive with the private sector. This new plan, implemented via Memorandum Order No. 198 effective January 1, 1994, was a complete package that superseded the old system. Critically, the new standardized salary rates under this plan were determined to be “comparable” to private sector rates and were presumed to have already incorporated the equivalent monetary value of all previously received allowances, including COLA and AA. To grant the separate payment of these allowances on top of the new salary would constitute double compensation, which is prohibited. Therefore, from the effectivity of the new NAPOCOR compensation plan on January 1, 1994, no separate entitlement to the old allowances existed. For the period July 1, 1989 to December 31, 1993, the claim was barred by laches due to the unions’ unreasonable delay of over 14 years in asserting their right, which prejudiced the government.