G.R. No. 87420 September 17, 1990
MAXIMO GABRIEL, petitioner, vs. HON. EUFEMIO C. DOMINGO, HON. BARTOLOME C. FERNANDEZ, JR. and HON. ALBERTO P. CRUZ, in their capacity as Chairman and Commissioners, respectively, of the Commission on Audit, respondents.

FACTS

Petitioner Maximo Gabriel, a permanent government employee since 1961, was holding the position of Motor Vehicle Registrar I and was designated Officer-in-Charge of the Marikina Agency. Following a reorganization under Executive Order No. 546, his position was renamed Transportation District Supervisor. On February 13, 1981, he was issued a casual appointment, and three days later, he was directed to relinquish his duties, effectively terminating his services. Gabriel had previously filed a protest with the Civil Service Commission (CSC) against the appointment of others to the position, which he believed he was more qualified for. He also filed a complaint for illegal termination.
The CSC, in its resolution for the protest case, found Gabriel more qualified and ordered his appointment to the position of Transportation District Supervisor III. Separately, the Merit Systems Board ruled that his termination via a casual appointment was illegal and directed his reinstatement to the same position effective from the date of his illegal separation. Despite these rulings, Gabriel was only reinstated on April 22, 1988, to a lower position. His claim for backwages for the period of his illegal dismissal was denied by the Commission on Audit (COA), citing the “no work, no pay” principle and the lack of a valid appointment at the time of termination.

ISSUE

Whether an illegally dismissed government employee, subsequently ordered reinstated, is entitled to backwages and other monetary benefits for the period of his illegal dismissal.

RULING

Yes. The Supreme Court granted the petition, annulling the COA decision. The Court emphasized the constitutional protection of security of tenure for civil servants. Gabriel, as a permanent employee, could not be removed except for cause. His termination, effected through an illegal casual appointment issued after he filed a protest, was invalid. Consequently, he remained a permanent employee entitled to the safeguards of his tenure.
The legal logic establishes that an illegal dismissal does not sever the employer-employee relationship for a civil servant protected by security of tenure. The dismissal being void, the employee is considered as not having left their office and is entitled to all the rights and privileges accruing from it, including back salaries. The Court rejected the COA’s “no work, no pay” argument, clarifying that this principle does not apply when the failure to work is not the employee’s fault but due to an unlawful dismissal. The government, as the unlawful dismissor, cannot benefit from its own wrongful act by withholding compensation.
However, the Court limited the grant of back salaries to a maximum of five years’ pay at the rate last received before dismissal, without qualification or deduction, following established jurisprudence. This limitation balances the employee’s right to restitution with the government’s fiscal interests, especially absent a finding of bad faith or personal malice on the part of the dismissing officials, in which case the government agency bears the liability.