The Supreme Court held that a government employee’s salary and position cannot be unilaterally downgraded if it results in a reduction of pay, violating the principle of non-diminution of pay. The Court emphasized that employment is a property right protected by due process, and any reallocation that reduces an employee’s salary after a valid appointment is illegal, especially without proper notice and opportunity to contest the action. This ruling safeguards the vested rights of government employees and ensures fair treatment in position reclassifications.

From Chief to Attorney V: When Can the Government Downgrade Your Position?

Gonzalo S. Go, Jr. was appointed as Chief Hearing Officer (Attorney VI, SG-26) at the Land Transportation Franchising and Regulatory Board (LTFRB). However, the Department of Budget and Management (DBM) reclassified his position to Attorney V, SG-25, resulting in a salary reduction. Go protested this “summary demotion,” arguing that LTFRB decisions were appealable to the Court of Appeals (CA), not just the Department of Transportation and Communications (DOTC) Secretary, thus entitling him to the higher grade. The Supreme Court (SC) tackled the issue of whether this downgrading was legal, considering the principles of non-diminution of pay and due process.

The initial legal battle involved procedural issues. The Court of Appeals (CA) dismissed Go’s petition, stating he used the wrong mode of appeal (Rule 43) and failed to implead a private respondent. However, the Supreme Court (SC) recognized the need to address the substantive issue, setting aside the procedural lapses in the interest of justice. The SC emphasized that procedural rules should not override substantial justice, especially when technical dismissals lead to inequitable results. Rules of procedure are meant to help secure, not override substantial justice. The Court thus proceeded to examine the core issue: the propriety of the reallocation of rank resulting in the downgrading of position and diminution of salary.

The SC addressed the appeal process from LTFRB rulings. It cited Section 6 of Executive Order (EO) 202, which explicitly states that decisions of the LTFRB are appealable to the DOTC Secretary. The Court applied the verba legis rule, explaining that when a statute is clear, it should be given its literal meaning. Since EO 202 clearly designates the DOTC Secretary as the initial appellate authority, direct appeals to the CA are not permitted. The Court further clarified that EO 202, issued by President Corazon Aquino under her legislative powers, carries the force of law. Additionally, as a special law creating the LTFRB, EO 202 takes precedence over the general provisions of Batas Pambansa (BP) 129, which generally governs appeals from quasi-judicial agencies.

The Court then addressed the authority of the DBM. It acknowledged that the DBM is vested with the power to administer the compensation and position classification system for the government. This authority is derived from Presidential Decree (PD) 985, as amended by Republic Act (RA) 6758, which mandates a unified compensation and position classification system. The DBM, through the Compensation and Position Classification Board (CPCB), has the power to define salary grades and allocate positions to their appropriate classes. However, the SC scrutinized whether the DBM’s reallocation was implemented legally, especially concerning the non-diminution of pay.

Go argued that the reallocation substantially reduced his salary, thus depriving him of property without due process. The Court sided with Go, emphasizing the principle of non-diminution of pay, a policy recognized in several cases involving government employees’ benefits. Section 15(b) of PD 985, as amended by Section 13(a) of RA 6758, states that “if an employee is moved from a higher to a lower class, he shall not suffer a reduction in salary.” Prior to its amendment, Section 15 (b) of PD 985 read: “(b)  Pay Reduction — If an employee is moved from a higher to a lower class, he shall not suffer a reduction in salary except where his current salary is higher than the maximum step of the new class in which case he shall be paid the maximum: Provided, That such movement is not the result of a disciplinary action.” The legislature’s deletion of this clause indicates the legislative intent of maintaining the level or grade of salary enjoyed by an incumbent before the reallocation to a lower grade or classification is effected. This provision reinforces the protection of incumbents’ salaries even if their positions are reclassified.

The Court further elucidated on the concept of vested rights. A vested right is a present, fixed interest that should be protected against arbitrary state action. In Crespo v. Provincial Board of Nueva Ecija, the Court affirmed that employment is a property right protected by the due process clause. Since Go had occupied his position as Chief, LTFRB Legal Division (Attorney VI, SG-26) for over a year before the reallocation, his entitlement to the benefits appurtenant to the position had ripened into a vested right. The Court emphasized that while the DBM has the authority to reclassify positions, this authority cannot be exercised in a manner that violates due process. Go was neither apprised nor given the opportunity to contest the reallocation before its implementation.

Therefore, the Supreme Court granted the petition, declaring the summary reallocation null and void. The DOTC was ordered to reinstate Go to the position of Attorney VI, SG-26, and to release the differential of all emoluments reckoned from April 8, 1991. The SC clarified that its ruling was not intended to disturb the reallocation of the Chief, LTFRB Legal Division position for future incumbents. This decision emphasizes the importance of protecting the vested rights of government employees and ensuring that any changes in position classification are implemented fairly and legally.

FAQs

What was the key issue in this case?	The central issue was whether the Department of Budget and Management (DBM) legally downgraded Gonzalo S. Go, Jr.’s position and salary at the Land Transportation Franchising and Regulatory Board (LTFRB). This involved questions of due process, non-diminution of pay, and the hierarchy of laws concerning appeals from quasi-judicial bodies.
What did the Supreme Court rule?	The Supreme Court ruled that the summary reallocation of Go’s position was illegal, violating the principle of non-diminution of pay and his right to due process. The Court ordered Go’s reinstatement to his original position and the payment of back emoluments.
Why did the Court find the reallocation illegal?	The Court found that Go’s employment was a property right, and the sudden reduction in salary, without notice or opportunity to contest, violated due process. The Court also emphasized the principle of non-diminution of pay, which protects employees from salary reductions when moved to a lower class.
What is the principle of non-diminution of pay?	The principle of non-diminution of pay ensures that an employee’s salary is not reduced when moved to a lower position or when there are changes in position classification. This principle is enshrined in Section 15(b) of PD 985, as amended by Section 13(a) of RA 6758.
What is a vested right?	A vested right is a present, fixed interest that is protected against arbitrary state action. It is a title, legal or equitable, to the present or future enjoyment of property.
What is the proper appeal process from LTFRB decisions?	According to Section 6 of Executive Order (EO) 202, decisions of the LTFRB are first appealable to the Department of Transportation and Communications (DOTC) Secretary. Subsequent appeals may then be made to the Office of the President (OP) and ultimately to the Court of Appeals (CA).
Why does EO 202 take precedence over BP 129 in this case?	EO 202, issued under President Aquino’s legislative powers, has the force of law and is considered a special law creating the LTFRB. As a special law, it takes precedence over the general provisions of Batas Pambansa (BP) 129 regarding appeals from quasi-judicial bodies.
What authority does the DBM have in position classification?	The Department of Budget and Management (DBM) has the authority to administer the government’s compensation and position classification system under Presidential Decree (PD) 985 and Republic Act (RA) 6758. This includes defining salary grades and allocating positions to their appropriate classes.

This case highlights the importance of protecting the rights of government employees against arbitrary actions that reduce their compensation. The Supreme Court’s decision reinforces the principle of non-diminution of pay and the due process rights of employees in position reclassifications. It serves as a reminder to government agencies to adhere to proper procedures and to respect vested rights when implementing changes in position and salary classifications.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: GONZALO S. GO, JR. VS. COURT OF APPEALS AND OFFICE OF THE PRESIDENT, G.R. No. 172027, July 29, 2010