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G.R. No. 104139 December 22, 1992

LYDIA M. PROFETA, petitioner,
vs.
HON. FRANKLIN M. DRILON, in his capacity as Executive Secretary, Office of the President of the
Philippines, respondent.

PADILLA, J.:
This is a petition for review on certiorari assailing a portion of the decision of the Office of the President, dated 23 October
1991, declaring petitioner as compulsorily retired as of 15 October 1991 and the resolution dated 31 January 1992
denying petitioner's motion for reconsideration of said decision.
The antecedents are the following:
Petitioner, Dr. Lydia M. Profeta, served as Executive Dean of the Rizal Technological Colleges from 24 October 1974 to 15
October 1978. From 16 October 1978 to 30 April 1979, petitioner was the appointed Acting President of said College until
her promotion to President of the same college on 1 May 1979.
After the 1986 EDSA revolution or on 5 March 1986, petitioner filed her courtesy resignation as President of the Rizal
Technological Colleges and the same was accepted on 21 March 1986. A day before the acceptance of her courtesy
resignation, petitioner applied for sick leave.
On 4 November 1988, petitioner was appointed Acting President of Eulogio "Amang" Rodriguez Institute of Science and
Technology (hereinafter referred to as EARIST) and was thereafter appointed its President on 29 March 1989.
After reaching the age of sixty-five (65) years on 16 June 1989, petitioner inquired from the Government Service
Insurance System (GSIS) as to whether she may be allowed to extend her services with the government as President of
EARIST beyond the age of sixty-five (65) years, to enable her to avail of the old-age pension retirement benefits under PD
1146 (Revised Government Service Insurance Act of 1977). In answer to her query, petitioner was advised by the GSIS to
return to the service until she shall have fulfilled the fifteen (15) years service requirement pursuant of Section 11 of PD
1146, to qualify for the old-age pension retirement plan. The GSIS declared that petitioner was not yet eligible to retire
under PD 1146, as she had not rendered the sufficient number of years of service on the date of her supposed retirement
on 16 June 1989 and that her creditable service was only twelve (12) years and two (2) months. As things stood, she
could only claim one hundred percent (100%) of her average monthly compensation for every year of creditable service or
to a refund of her premium contributions with the GSIS. 1
On 6 October 1989, as recommended by the Department of Education, Culture and Sports (DECS) Secretary and the
Board of Trustees of EARIST, President Aquino, through Deputy Executive Secretary Magdangal B. Elma, extended the
term of petitioner as President of EARIST until she shall have completed the required fifteen (15) years of service after
reaching the age of sixty five (65) years on the date of her normal retirement on 16 June 1989 or for an additional period
of two (2) years, seven (7) months and twelve (12) days. 2
In March 1990, the EARIST Faculty and Employees Union filed an administrative complaint against petitioner before the
Office of the President, for her alleged irregular appointment and for graft and corrupt practices. In a memorandum, dated
16 August 1990, the Office of the President furnished petitioner a copy of the complaint with a directive to file an answer
thereto with the DECS Secretary, who was duly authorized to conduct a formal investigation of the charges against
petitioner. Pending investigation of the complaint, petitioner was placed under preventive suspension for a period of ninety
(90) days. 3 After serving the period of suspension, petitioner re-assumed her duties and functions as President of
EARIST.
In a letter dated 20 July 1990, DECS Secretary Cario recommended the compulsory retirement of petitioner.

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For the purpose of investigating the administrative charges against petitioner, 5 an Ad-Hoc Committee was created by
President Aquino on 12 February 1991. The parties filed their respective pleadings and hearings in the case were
conducted by the committee.
Pending resolution of the administrative charges against her, petitioner was detailed with the DECS Central Office
pursuant to a memorandum dated 13 February 1991 signed by Deputy Executive Secretary Sarmiento III. Petitioner filed
a petition for certiorari, prohibition and mandamus before the Regional Trial Court of Manila, Branch 40, seeking her
reinstatement as EARIST President. After trial, said petition was dismissed. On appeal, the Court of Appeals denied the
petition for certiorari on 2 April 1991. 6
Petitioner likewise assailed her reassignment with the DECS Central Office, before the Civil Service Commission (CSC).
On 30 July 1991, the CSC denied petitioner's complaint. She moved for reconsideration of said resolution but the same
was denied on 3 December 1991, which prompted petitioner to file a petition for certiorari before this Court docketed as
G.R. No. 103271. On 3 March 1992, this Court dismissed said petition.
After evaluating the evidence presented before the Ad-Hoc Committee, in a decision 7 dated 23 October 1991, the Office
of the President dismissed the administrative complaint against petitioner for lack of substantial evidence. In the same
decision, the Office of the President also declared petitioner as compulsory retired from government service as of 15
October 1991, holding that:
... (I)f the aforesaid sick leave of 62 working days (approximately 3 months) were to be added to the
respondent's creditable service, together with the period of two (2) weeks which the respondent's counsel
admits in his Memorandum the respondent had served as Professorial Lecturer, the respondent should be
considered as compulsorily retired as of Oct. 15, 1991, having completed the required 15 years in the
service on or about the said date after reaching the age of 65.
Accordingly, the administrative charges against Dr. Lydia M. Profeta for her alleged "irregular appointment
and graft and corrupt practices" are hereby dismissed. However, Dr. Profeta is hereby considered as now
compulsorily retired from the service as of October 15, 1991, in accordance with the provisions of Section
11 (b) of Presidential Decree No. 1146, having completed fifteen (15) years in the government service on
or about he said date after reaching the age of sixty-five (65) on June 16, 1989. 8
In a letter dated 23 October 1991, petitioner requested the GSIS to determine the exact date of her retirement. On 5
November 1991, petitioner was advised by the GSIS that the exact date of her retirement falls on 14 August 1992. 9
A motion for reconsideration was then filed by petitioner with the Office of the President, assailing the portion of its
decision declaring her as compulsorily retired from the service as of 15 October 1991, alleging that the said office has no
jurisdiction over the issue of her compulsory retirement from the government service.
In a resolution 10 dated 31 January 1992, petitioner's motion for reconsideration was denied by the Office of the President.
In the same resolution, the Office of the President clarified that there was an over extension of petitioner's period of
service with the government by failure to reckon with the sixty-two (62) working days during which petitioner went on sick
leave (from 20 March to 17 June 1986) and the period of two (2) weeks during which petitioner served as Professorial
Lecturer. In considering petitioner as compulsory retired as of 15 October 1991, the Office of the President held that it
merely resolvedmotu proprio to shorten by three-and-a-half (3-1/2) months the extension granted to petitioner to complete
the required fifteen (15) years of service for purposes of retirement. It further declared that it is for the President to
determine whether or not petitioner could still continue as EARIST President despite her exoneration from the
administrative charges filed against her.
Under Presidential Decree No. 1146 (Revised Government Insurance Act of 1977), one of the benefits provided for
qualified members of the GSIS is the old-age pension benefit. A member who has rendered at least fifteen (15) years of
service and is at least sixty (60) years old when separated from the service, is entitled to a basic monthly pension for life
but for not less than five (5) years. On the other hand, a member who has rendered less than fifteen (15) years of service
but with at least three (3) years of service and is sixty (60) years of age when separated from the service is entitled to a
cash payment equivalent to one hundred percent (100%) of the average monthly compensation for every year of service.

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However, retirement is compulsory for a member who has reached the age of sixty-five (65) years with at least fifteen (15)
years of service. If he has less than fifteen (15) years of service, he shall be allowed to continue in the service to complete
the fifteen (15) years, 11 to avail of the old-age pension benefit.
To a public servant, a pension is not a gratuity but rather a form of deferred compensation for services performed and his
right to it commences to vest upon his entry into the retirement system and becomes an enforceable obligation in court
upon fulfillment of all conditions under which it is to be paid. Similarly, retirement benefits receivable by public employees
are valuable parts of the consideration for entrance into and continuation in public office or employment. They serve a
public purpose and a primary objective in establishing them is to induce competent persons to enter and remain in public
employment and render faithful and efficient service while so employed. 12 Retirement laws are liberally interpreted in
favor of the retiree because their intention is to provide for his sustenance and hopefully even comfort, when he no longer
has the stamina to continue earning his livelihood. 13 The liberal approach aims to achieve the humanitarian purposes of
the law in order that the efficiency, security and well-being of government employees maybe enhanced. 14
In the case at bar, at the time petitioner reached the compulsory retirement age of sixty-five (65) years, she had rendered
less than the required fifteen (15) years of service under Section 11 of P.D. 1146. Thus, to enable her to avail of the oldage pension benefit, she was allowed to continue in the service and her term as President of EARIST was extended until
she shall have completed the fifteen (15) years service requirement, or for an additional two (2) years, seven (7) months,
and twelve (12) days, as determined by the Office of the President.
This period of extended service granted to petitioner was amended by the Office of the President. In resolving the
administrative complaint against petitioner, the Office of the President, ruled not only on the issues of alleged irregular
appointment of petitioner and of graft and corrupt practices, but went further by, in effect, reducing the period of extension
of service granted to petitioner on the ground that the latter had already completed the fifteen (15) years service
requirement under P.D. 1146, and declared petitioner as compulsorily retired as of 15 October 1991.
In other words, the extension of service of petitioner was until January 1992. However, the Office of the President made a
new computation of petitioner's period of service with the government, the Office of the President included as part of her
service the sixty-two (62) days sick leave applied for by petitioner covering the period between 20 March to 17 June 1988
and her service as a lecturer of approximately two (2) weeks, or a total of three-and-a-half (3 1/2) months. As a result of
this new computation, petitioner's extension of service which was supposed to end in January 1992 was reduced by the
Office of the President by three-and-a-half (3 1/2) months or until 15 October 1991.
On the other hand, the computation made by the GSIS as to the exact date of retirement of petitioner fell on 14 August
1992. 15 Thus, the extension of service granted to petitioner by the Office of the President for two (2) years, seven (7)
months and twelve (12) days which brought her services only up to January 1992, would not enable herein petitioner to
complete the fifteen (15) years service requirement for purposes of retirement. To allow the Office of the President to
shorten the extension of service of petitioner by three-and-a-half (3 1/2) months which consist of petitioner's sick leave
and service as lecturer, would further reduce petitioner's service with the government. Such reduction from petitioner's
service would deprive her of the opportunity of availing of the old-age pension plan, based on the computation of the
GSIS.
We hold that it is the GSIS which has the original and exclusive jurisdiction to determine whether a member is qualified or
not to avail of the old-age pension benefit under P.D. 1146, based on its computation of a member's years of service with
the government. 16 The computation of a member's service includes not only full time but also part time and other services
with compensation as may be included under the rules and regulations prescribed by the System. 17
The sixty-two (62) days leave of absence of petitioner between 20 March to 17 June 1986 and her part-time service as a
lecturer f approximately two (2) weeks, or a total of three-and-a-half (3 1/2) months is not reflected in her service record.
Said period should be considered as part of her service with the government and it is only but proper that her service
record be amended to reflect said period of service.
We have observed that the computation made by the GSIS of petitioner's date of retirement failed to take into account the
three-and-a-half (3 1/2) months service of petitioner which was not reflected in her service record. If we deduct this

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unrecorded three-and-a-half (3 1/2) months service of petitioner from 14 August 1992, petitioner is to be considered
retired on 30 April 1992.
The order of the Office of the President declaring petitioner as compulsorily retired as of 15 October 1991 defeats the
purpose for allowing petitioner to remain in the service until she has completed the fifteen (15) years service requirement.
Between the period of 16 October 1991 to 30 April 1992, petitioner should have been allowed to continue in the service to
be able to complete the fifteen (15) years service requirement; she was prepared to render services for said period but
was not allowed to do so; she should, therefore, the entitled to all her salaries, benefits and other emoluments during said
period (16 October 1991 - 30 April 1992). However, petitioner's claim for reinstatement to her former position to enable her
to complete the fifteen (15) year service requirement for retirement purposes is no longer possible, considering that she is
deemed to have completed the said service requirement as of 30 April 1992.
WHEREFORE, the portion of the decision of the Office of the President dated 23 October 1991 declaring petitioner as
compulsorily retired as of 15 October 1991 is SET ASIDE. Petitioner is hereby declared to have been in the service as
President of EARIST from 16 October 1991 until 30 April 1992 and therefore entitled to all salaries, benefits and other
emoluments of said office from 16 October 1991 to 30 April 1992. In addition, she is declared as entitled to her old-age
pension benefits for having reached age 65 years while in the service with 15 years of service to her credit, subject to her
compliance with all applicable regulations and requirements of the GSIS.
SO ORDERED.

G.R. No. 173846

February 2, 2011

JOSE MARCEL PANLILIO, ERLINDA PANLILIO, NICOLE MORRIS and MARIO T. CRISTOBAL, Petitioners,
vs.
REGIONAL TRIAL COURT, BRANCH 51, CITY OF MANILA, represented by HON. PRESIDING JUDGE ANTONIO M.
ROSALES; PEOPLE OF THE PHILIPPINES; and the SOCIAL SECURITY SYSTEM, Respondents.
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court, seeking to set aside the April
27, 2006 Decision2 and August 2, 2006 Resolution3 of the Court of the Appeals (CA) in CA-G.R. SP No. 90947.
The facts of the case are as follows:
On October 15, 2004, Jose Marcel Panlilio, Erlinda Panlilio, Nicole Morris and Marlo Cristobal (petitioners), as corporate
officers of Silahis International Hotel, Inc. (SIHI), filed with the Regional Trial Court (RTC) of Manila, Branch 24, a petition
for Suspension of Payments and Rehabilitation4 in SEC Corp. Case No. 04-111180.
On October 18, 2004, the RTC of Manila, Branch 24, issued an Order 5 staying all claims against SIHI upon finding the
petition sufficient in form and substance. The pertinent portions of the Order read:
Finding the petition, together with its annexes, sufficient in form and substance and pursuant to Section 6, Rule 4 of the
Interim Rules on Corporate Rehabilitation, the Court hereby:
xxxx
2) Stays the enforcement of all claims, whether for money or otherwise and whether such enforcement is by court action
or otherwise, against the debtor, its guarantors and sureties not solidarily liable with the debtor. 6

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At the time, however, of the filing of the petition for rehabilitation, there were a number of criminal charges 7pending against
petitioners in Branch 51 of the RTC of Manila. These criminal charges were initiated by respondent Social Security
System (SSS) and involved charges of violations of Section 28 (h) 8 of Republic Act 8282, or the Social Security Act of
1997 (SSS law), in relation to Article 315 (1) (b)9 of the Revised Penal Code, or Estafa. Consequently, petitioners filed with
the RTC of Manila, Branch 51, a Manifestation and Motion to Suspend Proceedings. 10 Petitioners argued that the stay
order issued by Branch 24 should also apply to the criminal charges pending in Branch 51. Petitioners, thus, prayed that
Branch 51 suspend its proceedings until the petition for rehabilitation was finally resolved.
On December 13, 2004, Branch 51 issued an Order 11 denying petitioners motion to suspend the proceedings. It ruled that
the stay order issued by Branch 24 did not cover criminal proceedings, to wit:
xxxx
Clearly then, the issue is, whether the stay order issued by the RTC commercial court, Branch 24 includes the abovecaptioned criminal cases.
The Court shares the view of the private complainants and the SSS that the said stay order does not include the
prosecution of criminal offenses. Precisely, the law "criminalizes" the non-remittance of SSS contributions by an employer
to protect the employees from unscrupulous employers. Clearly, in these cases, public interest requires that the said
criminal acts be immediately investigated and prosecuted for the protection of society.
From the foregoing, the inescapable conclusion is that the stay order issued by RTC Branch 24 does not include the
above-captioned cases which are criminal in nature.12
Branch 51 denied the motion for reconsideration filed by petitioners.
On August 19, 2005, petitioners filed a petition for certiorari 13 with the CA assailing the Order of Branch 51.
On April 27, 2006, the CA issued a Decision denying the petition, the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition is hereby DENIED and is accordingly DISMISSED. No costs. 14
The CA discussed that violation of the provisions of the SSS law was a criminal liability and was, thus, personal to the
offender. As such, the CA held that the criminal proceedings against the petitioners should not be considered a claim
against the corporation and, consequently, not covered by the stay order issued by Branch 24.
Petitioners filed a Motion for Reconsideration,15 which was, however, denied by the CA in a Resolution dated August 2,
2006.
Hence, herein petition, with petitioners raising a lone issue for this Courts resolution, to wit:
x x x WHETHER OR NOT THE STAY ORDER ISSUED BY BRANCH 24, REGIONAL TRIAL COURT OF MANILA, IN SEC
CORP. CASE NO. 04-111180 COVERS ALSO VIOLATION OF SSS LAW FOR NON-REMITTANCE OF PREMIUMS AND
VIOLATION OF [ARTICLE] [3] 515 OF THE REVISED PENAL CODE. 16
The petition is not meritorious.
To begin with, corporate rehabilitation connotes the restoration of the debtor to a position of successful operation and
solvency, if it is shown that its continued operation is economically feasible and its creditors can recover more, by way of
the present value of payments projected in the rehabilitation plan, if the corporation continues as a going concern than if it
is immediately liquidated.17 It contemplates a continuance of corporate life and activities in an effort to restore and
reinstate the corporation to its former position of successful operation and solvency, the purpose being to enable the
company to gain a new lease on life and allow its creditors to be paid their claims out of its earnings. 18

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A principal feature of corporate rehabilitation is the suspension of claims against the distressed corporation. Section 6 (c)
of Presidential Decree No. 902-A, as amended, provides for suspension of claims against corporations undergoing
rehabilitation, to wit:
Section 6 (c). x x x
x x x Provided, finally, that upon appointment of a management committee, rehabilitation receiver, board or body, pursuant
to this Decree, all actions for claims against corporations, partnerships or associations under management or receivership
pending before any court, tribunal, board or body, shall be suspended accordingly.19
In November 21, 2000, this Court En Banc promulgated the Interim Rules of Procedure on Corporate
Rehabilitation,20 Section 6, Rule 4 of which provides a stay order on all claims against the corporation, thus:
Stay Order. - If the court finds the petition to be sufficient in form and substance, it shall, not later than five (5) days from
the filing of the petition, issue an Order x x x; (b) staying enforcement of all claims, whether for money or otherwise and
whether such enforcement is by court action or otherwise, against the debtor, its guarantors and sureties not solidarily
liable with the debtor; x x x21
In Finasia Investments and Finance Corporation v. Court of Appeals, 22 the term "claim" has been construed to refer to
debts or demands of a pecuniary nature, or the assertion to have money paid. The purpose for suspending actions for
claims against the corporation in a rehabilitation proceeding is to enable the management committee or rehabilitation
receiver to effectively exercise its/his powers free from any judicial or extrajudicial interference that might unduly hinder or
prevent the rescue of the debtor company.23
The issue to be resolved then is: does the suspension of "all claims" as an incident to a corporate rehabilitation also
contemplate the suspension of criminal charges filed against the corporate officers of the distressed corporation?
This Court rules in the negative.
In Rosario v. Co24 (Rosario), a case of recent vintage, the issue resolved by this Court was whether or not during the
pendency of rehabilitation proceedings, criminal charges for violation of Batas Pambansa Bilang 22 should be suspended,
was disposed of as follows:
x x x the gravamen of the offense punished by B.P. Blg. 22 is the act of making and issuing a worthless check; that is, a
check that is dishonored upon its presentation for payment. It is designed to prevent damage to trade, commerce, and
banking caused by worthless checks. In Lozano v. Martinez, this Court declared that it is not the nonpayment of an
obligation which the law punishes. The law is not intended or designed to coerce a debtor to pay his debt. The thrust of
the law is to prohibit, under pain of penal sanctions, the making and circulation of worthless checks. Because of its
deleterious effects on the public interest, the practice is proscribed by the law. The law punishes the act not as an offense
against property, but an offense against public order. The prime purpose of the criminal action is to punish the offender in
order to deter him and others from committing the same or similar offense, to isolate him from society, to reform and
rehabilitate him or, in general, to maintain social order. Hence, the criminal prosecution is designed to promote the public
welfare by punishing offenders and deterring others.
Consequently, the filing of the case for violation of B.P. Blg. 22 is not a "claim" that can be enjoined within the purview of
P.D. No. 902-A. True, although conviction of the accused for the alleged crime could result in the restitution, reparation or
indemnification of the private offended party for the damage or injury he sustained by reason of the felonious act of the
accused, nevertheless, prosecution for violation of B.P. Blg. 22 is a criminal action.
A criminal action has a dual purpose, namely, the punishment of the offender and indemnity to the offended party. The
dominant and primordial objective of the criminal action is the punishment of the offender. The civil action is merely
incidental to and consequent to the conviction of the accused. The reason for this is that criminal actions are primarily
intended to vindicate an outrage against the sovereignty of the state and to impose the appropriate penalty for the
vindication of the disturbance to the social order caused by the offender. On the other hand, the action between the
private complainant and the accused is intended solely to indemnify the former.25lauuphil

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Rosario is at fours with the case at bar. Petitioners are charged with violations of Section 28 (h) of the SSS law, in relation
to Article 315 (1) (b) of the Revised Penal Code, or Estafa. The SSS law clearly "criminalizes" the non-remittance of SSS
contributions by an employer to protect the employees from unscrupulous employers. Therefore, public interest requires
that the said criminal acts be immediately investigated and prosecuted for the protection of society.
The rehabilitation of SIHI and the settlement of claims against the corporation is not a legal ground for the extinction of
petitioners criminal liabilities. There is no reason why criminal proceedings should be suspended during corporate
rehabilitation, more so, since the prime purpose of the criminal action is to punish the offender in order to deter him and
others from committing the same or similar offense, to isolate him from society, reform and rehabilitate him or, in general,
to maintain social order.26 As correctly observed in Rosario,27 it would be absurd for one who has engaged in criminal
conduct could escape punishment by the mere filing of a petition for rehabilitation by the corporation of which he is an
officer.
The prosecution of the officers of the corporation has no bearing on the pending rehabilitation of the corporation,
especially since they are charged in their individual capacities. Such being the case, the purpose of the law for the
issuance of the stay order is not compromised, since the appointed rehabilitation receiver can still fully discharge his
functions as mandated by law. It bears to stress that the rehabilitation receiver is not charged to defend the officers of the
corporation. If there is anything that the rehabilitation receiver might be remotely interested in is whether the court also
rules that petitioners are civilly liable. Such a scenario, however, is not a reason to suspend the criminal proceedings,
because as aptly discussed in Rosario, should the court prosecuting the officers of the corporation find that an award or
indemnification is warranted, such award would fall under the category of claims, the execution of which would be subject
to the stay order issued by the rehabilitation court. 28The penal sanctions as a consequence of violation of the SSS law, in
relation to the revised penal code can therefore be implemented if petitioners are found guilty after trial. However, any civil
indemnity awarded as a result of their conviction would be subject to the stay order issued by the rehabilitation court. Only
to this extent can the order of suspension be considered obligatory upon any court, tribunal, branch or body where there
are pending actions for claims against the distressed corporation. 29
On a final note, this Court would like to point out that Congress has recently enacted Republic Act No. 10142, or the
Financial Rehabilitation and Insolvency Act of 2010.30 Section 18 thereof explicitly provides that criminal actions against
the individual officer of a corporation are not subject to the Stay or Suspension Order in rehabilitation proceedings, to wit:
The Stay or Suspension Order shall not apply:
xxxx
(g) any criminal action against individual debtor or owner, partner, director or officer of a debtor shall not be affected by
any proceeding commenced under this Act.
Withal, based on the foregoing discussion, this Court rules that there is no legal impediment for Branch 51 to proceed with
the cases filed against petitioners.
WHEREFORE, premises considered, the petition is DENIED. The April 27, 2006 Decision and August 2, 2006 Resolution
of the Court of Appeals in CA-G.R. SP No. 90947 are AFFIRMED. The Regional Trial Court of Manila, Branch 51, is
ORDERED to proceed with the criminal cases filed against petitioners.
SO ORDERED.