CSC VS.

CORTEZ, 723 SCRA 609

FACTS

Commission En Banc of the Commission on Human Rights (CHR) issued a Resolution

approving the appointment to the position of Information Officer V (IO V) of respondent
Maricelle M. Cortes. Commissioner Eligio P. Mallari, father of respondent Cortes,
abstained from voting and requested the CHR to render an opinion on the legality of
the respondent’s appointment.

The CHR Legal Division Chief rendered an opinion that respondent Cortes’
appointment is not covered by the rule on nepotism because the appointing authority,
the Commission En Banc, has a personality distinct and separate from its members.
CHR Chairperson Quisumbing, however, sent respondent a letter on the same day
instructing her not to assume her position because her appointment is not yet
complete.

Later, CSC-NCR Field Office informed Chairperson Quisumbing that it will conduct an
investigation on the appointment of respondent Cortes.

Director Cornelio of the CSC-NCR Field Office informed Chairperson Quisumbing that
the appointment of respondent Cortes is not valid because it is covered by the rule on
nepotism under Section 9 of the Revised Omnibus Rules on Appointments and Other
Personnel Actions. According to the CSC-NCR, Commissioner Mallari is considered an
appointing authority with respect to respondent Cortes despite being a mere member
of the Commission En Banc.

ISSUE: Whether or not the appointment of respondent Cortes as IO V in the CHR is

covered by the prohibition against nepotism.

HELD

YES. Nepotism is defined as an appointment issued in favor of a relative within the

third civil degree of consanguinity or affinity of any of the following:

appointing authority;

recommending authority;

chief of the bureau or office; and (4) person exercising immediate supervision over the
appointee.

Here, it is undisputed that respondent Cortes is a relative of Commissioner Mallari in

the first degree of consanguinity, as in fact Cortes is the daughter of Commissioner
Mallari.

By way of exception, the following shall not be covered by the prohibition:

persons employed in a confidential capacity;

teachers;

physicians; and

members of the Armed Forces of the Philippines.

In the present case, however, the appointment of respondent Cortes as IO V in the

CHR does not fall to any of the exemptions provided by law.

In her defense, respondent Cortes merely raises the argument that the appointing
authority referred to in Section 59 of the Administrative Code is the Commission En
Banc and not the individual Commissioners who compose it.

The purpose of Section 59 on the rule against nepotism is to take out the discretion of
the appointing and recommending authority on the matter of appointing or
recommending for appointment a relative.

Clearly, the prohibition against nepotism is intended to apply to natural persons. It is

one pernicious evil impeding the civil service and the efficiency of its personnel.

Indeed, it is absurd to declare that the prohibitive veil on nepotism does not include
appointments made by a group of individuals acting as a body.

What cannot be done directly cannot be done indirectly. This principle is elementary
and does not need explanation. Certainly, if acts that cannot be legally done directly
can be done indirectly, then all laws would be illusory.

In the present case, respondent Cortes’ appointment as IO V in the CHR by the

Commission En Banc, where his father is a member, is covered by the prohibition.

Commissioner Mallari’s abstention from voting did not cure the nepotistic character of
the appointment because the evil sought to be avoided by the prohibition still exists.
His mere presence during the deliberation for the appointment of IO V created an
impression of influence and cast doubt on the impartiality and neutrality of the
Commission En Banc.

The CSC-NCR Decision invalidating the appointment of respondent Maricelle M.

Cortes for being nepotistic was REINSTATED.
GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,
vs.
CIVIL SERVICE COMMISSION and MATILDE S. BELO, respondents.

FACTS:

In our decision dated October 28, 1994 we held that government service rendered on
a per diem basis is not creditable in computing the length of service for retirement
purposes. Thus, we reversed the questioned resolutions and orders of the Civil Service
Commission (CSC) requiring the Government Service Insurance System (GSIS) to
consider creditable the services of private respondents on a per diem basis.

However, private respondent Matilde S. Belo in G.R. No 102449 filed a motion for
reconsideration dated 17 November 1994, of this Court’s decision of October 28, 1994.
She insists that the services rendered by her as Vice Governor of Capiz, between
December 31, 1975 to January 1, 1979, be considered as creditable for purposes of
retirement. The Government Service Insurance System likewise filed a motion for
reconsideration on November 22, 1984 in behalf of both private respondents Belo and
Dr. Manuel Baradero on essentially the same grounds.

In its June 7, 1989 Resolution3 on the matter, CSC held that the services rendered for
the first holdover period between January 31, 1976 to January 1, 1979 was creditable
for purposes of retirement. CSC noted that during the entire holdover period,
respondent Belo actually served on a full time basis as Vice Governor and was on call
24 hours a day. Disagreeing with the CSC's insistence that the period in which
respondent Belo was paid on a per diem basis should be credited in computing the
number of years of creditable service to the government, GSIS subsequently filed a
petition for certiorari before this court, questioning the orders of the CSC.

ISSUE: Whether or not regular service in government on a per diem basis, without any
other form of compensation or emolument, is compensation within the contemplation
of the term "service with compensation" under the Government Service Insurance Act
of 1987.

HELD: A review of the circumstances surrounding payment to respondent Belo of

the per diems in question convinces us that her motion is meritorious. We are
convinced that the "per diem" she received was actually paid for in the performance of
her duties as Vice-Governor of Capiz in a holdover capacity not as the per
diem referred to by section 1(c) of R.A. No 1573 which amended Section 1(c) of C.A.
No. 186 (Government Insurance Service Act). A closer look at the aforecited provision,
moreover, reveals a legislative intent to make a clear distinction between salary, pay or
compensation, on one hand, and other incidental allowances, including per diems on
the other. Section 1(c) provides:

(c) Salary, pay or compensation shall be construed as to exclude all bonuses, per
diems, allowances and overtime pay, or salary, pay or compensation given to the base
pay of the position or rank as fixed by law or regulations. 5

In the sense in which the phrase "per diem" is used under the Government Service
Insurance Law, a per diem is a daily allowance given for each day an officer or
employee of government is away from his home base.8 This is its traditional meaning:
its usual signification is as a reimbursement for extra expenses incurred by the public
official in the performance of his duties.9 Under this definition the per diem intended to
cover the cost of lodging and subsistence of officers and employees when the latter are
on duty outside of their permanent station. 10

On the other hand, a per diem could rightfully be considered a compensation or

remuneration attached to an office. 11 Under the circumstances obtaining in the case
of respondent Belo the per diems received by her during the period that she acted in
holdover capacity obviously were in the nature of compensation or remuneration for
her services as Vice Governor of the Province of Capiz, rather than as a
reimbursement for incidental expenses incurred while away from her home base.

Ambrosio vs COA

Facts:

Sometime in February 1994, the Resident Auditor of the COA in the NTA, Dalisay E.
Aracan issued a Notice of Disallowance of the payment of the Educational Assistance
Incentive Bonus (EAIB)for the calendar year 1993 and 1994 stating that the NTA had
no statutory authority to grant the incentive. The COA, in its Decision dated February
7, 1995, affirmed the disallowance of the EAIB. Consequently, the NTA, then as the
petitioner and through its then Administrator Amante Siapno and other employees,
filed with the Court who granted the petition to nullify the COA Decision disallowing
the EAIB. But Relying on the second sentence of Section 12 of R.A. No. 6758, COA
contends that the legislative intent was to limit such additional compensation to the
incumbents, as of July 1, 1989 only which the company applied. The Act states that:
“Such other additional compensation, whether in cash or in kind, being received by
incumbents only as of July 1, 1989 not integrated into the standardized salary rates
shall continue to be authorized.”

Issue: Whether or not the COA gravely abused its discretion in disallowing the payment
of the EAIB to the employees of the NTA who were non-incumbents of the positions as
of July 1, 1989, the date when R.A. No. 6758 took effect.

Held: No. Again citing the second sentence (first paragraph) of Section 12 of R.A. No.
6758, the Court, in the said case, took into consideration the intent of Congress to
prevent any diminution of the pay and benefits being received by the incumbents at
the time of the enactment of R.A. No. 6758. It, however, opined that the petitioners,
non-incumbent employees, therein could not claim that they had acquired a vested
right over the EAIB because the same was always subject to availability of funds. The
petitioners are, in effect, invoking the principle of equal protection of the law embodied
in the Constitution. The second sentence (first paragraph) of Section 12 of R.A. No.
6758 does not infringe the equal protection clause of the Constitution as it is based on
reasonable classification intended to protect the right of the incumbents against
diminution of their pay and benefits. The petitioners in the present case, who are
admittedly non-incumbent employees of the NTA as of July 1, 1989, cannot, therefore,
claim similar treatment as the incumbents as of the said date, with respect to the
grant of the EAIB. Petition is dismissed.

GSIS vs PAUIG

Facts:

Respondent Apolinario C. Pauig (Pauig) was the Municipal Agriculturist of the

Municipality of San Pablo, lsabela. He started in the government service on February
12, 1964 as Emergency Laborer on casual status. Later, he became a temporary
employee from July 5, 1972 to July 18, 1977. On July 19, 1977, he became a
permanent employee, and on August 1, 1977, he became a GSIS member, as indicated
in his Information for Membership.

Thereafter, on November 3, 2004, he retired from the service upon reaching the
mandatory retirement age of sixty-five (65) years old. But when he filed his retirement
papers with the GSIS-Cauayan, the latter processed his claim based on a Record of
Creditable Service (RCS) and a Total Length of Service of only twenty-seven (27) years.
Disagreeing with the computation, Pauig wrote a letter-complaint to the GSIS, arguing
that his first fourteen (14) years in the government service had been. erroneously
omitted.
The GSIS ratiocinated that Pauig's first fourteen (14) years in the government were
excluded in the computation of his retirement benefits because during those years, no
premium payments were remitted to it. Under the Premium-Based Policy of the GSIS
which took effect on August 1, 2003, only periods of service where premium payments
were made and duly remitted to the System shall be included in the computation of
retirement benefits. Aggrieved, Pauig filed a case before the RTC of Cabagan, Isabela.
The RTC ruled in favor of the respondent which prompted the GSIS to file a Petition for
Review in the SC

Issue: W/N the GSIS should include Pauig's first fourteen (14) years in government
service for the calculation of the latter's retirement benefits claim.

Held: Yes

Retirement benefits are given to government employees to reward them for giving the
best years of their lives to the service of their country. This is especially true with
those in government service occupying positions of leadership or positions requiring
management skills because the years they devote to government service could be
spent more profitably elsewhere, such as in lucrative appointments in the private
sector. Hence, in exchange for their selfless dedication to government service, they
should enjoy security of tenure and be ensured of a reasonable amount of support
after they leave the government.

Compulsory coverage under the GSIS had previously and consistently included regular
and permanent employees, and expressly excluded casual, substitute or temporary
employees from its retirement insurance plan. A permanent appointment is one issued
to a person who has met the requirements of the position to which appointment is
made, in accordance with the provisions of the Civil Service Act and the Rules and
Standards, while temporary appointment is made in the absence of appropriate
eligibles and it becomes necessary in the public interest to fill a vacancy. Casual
employment, on the other hand, is not permanent but occasional, unpredictable,
sporadic and brief in nature. 11 Based on the records, Pauig began his career in the
government on February 12, 1964 as Emergency Laborer on a casual status. Then, he
became a temporary employee from July 5, 1972 to July 18, 1977. However, the Court
notes that it was not until 1997 that the compulsory membership in the GSIS was
extended to employees other than those on permanent status,

The primordial reason why there were no deductions during those fourteen (14) years
was because Pauig was not yet a GSIS member at that time. There was thus no legal
obligation to pay the premium as no basis for the remittance of the same existed. And
since only periods of service where premium payments were actually made and duly
remitted to the GSIS shall be included in the computation of retirement benefits, said
disputed period of fourteen (14) years must corollarily be removed from Pauig's
creditable service.
NAYONG PILIPINO FOUNDATION, INC v. PULIDO TAN

Facts
On June 6, 2000, in commemoration of NPFI's 30th Founding Anniversary, NPFI Board
of Trustees, through Board Resolution, authorized the grant to its officers and
employees who have rendered services for at least one (1) year, an Anniversary Bonus
amounting to Php 3,000.00 each.

On February 4, 2005, COA issued Audit Observation Memorandum (AOM), finding

that the grant of NPFI in May 2004 of Anniversary Bonus and Extra Cash Gift have no
legal basis nor approval of thePresident and did not submit the required exemption
from the Department of Budget and Management (DBM) for the payment of honoraria
to its BAC and TWG members.

NPFI argues that Administrative Order (A.O.) No. 263 dated March 28, 1996 and DBM
National Budget Circular No. 452 dated May 20, 1996 explicitly authorize the grant of
Anniversary Bonus to agencies in celebration of their milestone year in the amount of
Php 3,000.00, as in the case at bar where it was granted in celebration of NPFI's 30th
and 35th anniversary. Further, NPFI argues that COA should have allowed the 35th
Anniversary Bonus given in 2004 to be applied in 2007 considering that the
pronouncement that NPFI's anniversary should be reckoned from November 6, 1972
instead of June 11, 1969, was made only on September 11, 2005.

On the other hand, the respondents claim, that no grave abuse of discretion may be
attributed to them in affirming the disallowance of the Anniversary Bonus and Extra
Cash Gift granted to NPFI's trustees, officials and personnel; and honoraria to its BAC
and TWG members, as the same is supported by pertinent laws, circulars, and orders.

Issue

Whether the COA gravely abused its discretion when it disallowed NPFI's payment of
Anniversary Bonus and Extra Cash Gift to its trustees, officials and personnel; and
honoraria to its BAC and TWG members.
Held

No. The COA, by mandate of the 1987 Constitution, is the guardian of public funds,
vested of broad powers over all accounts pertaining to government revenue and
expenditures and the uses of public funds and property, including the exclusive
authority to define the scope of its audit and examination, to establish the techniques
and methods for such review, and to promulgate accounting and auditing rules and
regulations.16

In the exercise of its constitutional duty, the COA is given a wide latitude of discretion "to determine,
prevent, and disallow irregular, unnecessary, excessive, extravagant, or unconscionable expenditures of
government funds"17 and has the power to ascertain whether public funds were utilized for the purpose for
which they had been intended by law.18

Verily, the Court has sustained the decisions of administrative authorities like the COA as a matter of
general policy, not only on the basis of the doctrine of separation of powers but also upon the recognition
that such administrative authorities held the expertise as to the laws they are entrusted to enforce. Thus,
the Court has accorded not only respect but also finality to COA's findings particularly
when their decisions are not tainted with unfairness or arbitrariness that would
amount to grave abuse of discretion.