G.R. No. L-74322. July 29, 1988.
THE PHILIPPINE VETERANS AFFAIRS OFFICE, petitioner, vs. ASTERIO Q. TAMAYO, respondent.

FACTS

Respondent Asterio Tamayo, a permanently incapacitated WWII veteran, was approved for a life pension under Section 9 of Republic Act No. 65 (the Veteran’s Bill of Rights) on May 20, 1948. The Philippine Veterans Affairs Office (PVAO), however, only paid him a reduced pension based on a 25% disability rating. Subsequent amendments to the law increased the monthly pension rates. While Tamayo’s pension was eventually adjusted when his disability was re-rated to 100% in 1964, and he began receiving the full statutory rate in 1972, he filed a complaint in 1982 to recover differential pensions from 1948. The Regional Trial Court ruled in his favor, ordering PVAO to pay the full benefits from 1948 to 1972, minus amounts already paid, plus attorney’s fees. The court held that PVAO’s authority was limited to determining permanent incapacity, not rating the degree of disability, and that once entitlement to full pension was established, it could not be reduced.

ISSUE

The core issue is whether PVAO has the authority to rate a veteran’s degree of disability for pension purposes under R.A. No. 65 , as amended, and consequently, whether respondent Tamayo is entitled to full pension benefits from the date of his initial claim in 1948, or only from the date his disability was officially rated at 100%.

RULING

The Supreme Court modified the RTC decision, ruling that PVAO possesses the implied authority to rate disabilities. The legal logic is anchored on the administrative powers granted to the then Philippine Veterans Board (PVAO’s predecessor) by R.A. No. 65 and its consolidating law, R.A. No. 2664 . These laws empowered the Board to adopt necessary rules and regulations and to pass upon the merits and qualifications of applicants to fulfill the law’s aims. The Court reasoned that such a mandate inherently includes the authority to classify and rate the extent of a veteran’s disability to implement the pension system fairly and administratively. This interpretation was consistent with prior jurisprudence (Agcaoili and Añover). The Court further held that Tamayo, by his prolonged inaction from 1948 to 1964 in contesting the 25% rating, was deemed to have admitted its correctness. Therefore, he was only entitled to full benefits once his rating was officially increased to 100% in 1964. However, the Court found that from June 22, 1969 (the effectivity of R.A. No. 5753 which raised pension rates) until August 9, 1972 (when he finally received the increased rate), Tamayo was paid under the old rate. Thus, he was entitled to the differential for that specific period. The award for attorney’s fees and costs was deleted, as there was no showing of bad faith by PVAO, and the doctrine of state immunity precludes awarding costs against a government entity sued in its official capacity.