CA: State workers not entitled to COLA

MANILA, Philippines – The Court of Appeals (CA) has ruled that government employees are not entitled to cost-of-living allowance (COLA) separate from their regular pay, otherwise, they are guilty of double compensation that is prohibited by the Constitution.

Article IX-B, Section 8 of the Constitution provides that “no elective or appointive public officer or employee shall receive additional, double, or indirect compensation.”

In a 16-page decision promulgated last December 30, the appellate court held that the COLA had been effectively integrated into the basic salaries of public workers by virtue of Republic Act 6758, the Salary Standardization Law, which took effect on July 1, 1989.

The decision was written by Associate Justice Mario Guariña III and concurred in by Associate Justices Apolinario Bruselas Jr. and Rodil Zalameda of the CA’s Eighth Division.

The ruling stemmed from the dispute between Malacañang and some 109 employees of the Tariff Commission over their unpaid COLAs and transportation allowances from 1989 to 2001.

In 2002, members of the Tariff Commission Employees Association (TARCEA) sued the Office of the President – represented by then Executive Secretary Eduardo Ermita and Budget Secretary Rolando Andaya Jr. – for denying their request for differential payment of COLAs and transportation allowances.

The Office of the President had affirmed an earlier decision of the Department of Budget and Management (DBM) that the COLA has already been integrated in the standardized salary rates since July 1989, citing RA 6758 as well as various circulars issued by the DBM enforcing the law.

Based on the list prepared by TARCEA, the total amount of the COLA claimed ending 2001 reached P7,489,800.

TARCEA, in pressing the claim, banked on the 1998 ruling of the Supreme Court (SC) in De Jesus v. Commission on Audit (CoA) where it was held that Corporate Compensation Circular No. 10, which governs salaries of government-owned and controlled corporations and financial institutions, was ineffective for it did not go through the requisite publication in the Official Gazette or in a newspaper of general circulation in the country.

It also cited the 2005 SC ruling in Philippine National Bank v. Palma which held that the allowances or fringe benefit whether or not integrated into the standardized salaries prescribed by RA 6768 should continue to be enjoyed by employees who were incumbents and receiving those benefits as of July 1, 1989.

But the CA said both the De Jesus and Palma rulings do not apply to the case of Tariff Commission employees.

The applicable doctrine, it said, was the ruling in Napocor Employees Consolidated Union (NECU) v. National Power Corp. in which the SC junked the petition to require the state-owned power firm to remit a 10-percent employer’s contribution by way of employees’ welfare allowance after finding out that the same has already been integrated into the standardized salary rates of its employees.

The CA also noted the issuance of the DBM of Notice of Position Allocation and Salary Adjustment (NPASA), which provides the breakdown of the employees’ gross monthly pay as of June 30, 1989, the eve of the effectivity of RA 6758.

It said all government employees were furnished a copy of NPASA, which advised them that the COLA was already integrated to their basic salary rates.

According to the appellate court, the NPSA “establishes a clear case of factual integration under the NECU doctrine.”

“What may be the best indication of the fact of integrated is the absence of any protest or complaint of the government employees concerned that the integration had resulted in a diminution of the pay of the government employees,” the CA said.

It also pointed out that the Office of the Solicitor General (OSG) had made a convincing presentation that the adjusted salaries of the Tariff Commission employees effective July 1, 1989 had increased as a result among others of the integration of the COLA.

As an example, the OSG pointed to the salary of a senior tariff analyst who as of June 30, 1989 was receiving an actual monthly salary of P4,519, including COLA amounting to P500. But the adjusted salary rate became P5,670, representing an upward adjustment of P1,151.

Similarly, a chief tariff specialist receiving a total monthly compensation of P7,022 prior to RA 6758 would receive an increased monthly standardized salary of P10,135 with a salary adjustment of P3,113. –EDMER PANESA, Manila Bulletin