This Supreme Court resolution denies the motion for reconsideration filed by the National Power Corporation Employees Consolidated Union (NECU) and the National Power Corporation Employees and Workers Union (NEWU). The Court affirmed its earlier decision, which held that the Cost of Living Allowance (COLA) and Amelioration Allowance (AA) of NAPOCOR employees were already integrated into their standardized salaries under Republic Act No. 6758. This ruling means that NAPOCOR employees are not entitled to additional payments for COLA and AA during the contested period, ensuring consistency in the application of compensation laws within the civil service. The decision emphasizes that granting additional payments would create salary distortions and unequal protection under the law.

NAPOCOR’s Compensation Conundrum: Were COLA and AA Factually Integrated?

This case revolves around the long-standing dispute over the Cost of Living Allowance (COLA) and Amelioration Allowance (AA) of employees of the National Power Corporation (NAPOCOR). The central question is whether these allowances were already factored into the employees’ standardized salaries following the implementation of Republic Act No. 6758, also known as the Compensation and Position Classification Act of 1989. The legal battle commenced when NECU and NEWU filed a Petition for Mandamus, seeking to compel NAPOCOR to release the COLA and AA allegedly withheld from them between July 1, 1989, and March 19, 1999. They argued that, like employees in other government entities, their allowances had not been properly integrated into their basic pay.

The Regional Trial Court initially sided with the unions, ordering NAPOCOR to pay a substantial amount in back COLA and AA, along with legal interest. However, the Office of the Solicitor General (OSG) and the Department of Budget and Management (DBM) challenged this decision, leading to the present case before the Supreme Court. The Supreme Court, in its original decision, granted the Petitions for Certiorari, effectively reversing the trial court’s ruling. It found that the COLA and AA had indeed been integrated into the employees’ salaries under Section 12 of Republic Act No. 6758 and Memorandum Order No. 198, series of 1994.

The unions, representing 16,500 workers, filed a motion for reconsideration, insisting that their COLA and AA were deducted from their salaries during the specified period. They categorized NAPOCOR workers into three groups, each with a slightly different claim regarding the alleged deductions. The unions presented “Exhibit C” as evidence, asserting that it proved their basic pay did not include the disputed allowances. However, the Supreme Court found this argument unpersuasive. The OSG countered that the unions’ arguments had already been thoroughly addressed in the Court’s original decision, warranting a denial of the motion for reconsideration.

The Supreme Court reiterated that Republic Act No. 6758 remained effective during the relevant period, and Section 12 mandated the consolidation of allowances into standardized salaries. Section 12 of Republic Act No. 6758 explicitly states:

Section 12. Consolidation of Allowances and Compensation. – All allowances, except for representation and transportation allowances; clothing and laundry allowances; subsistence allowance of marine officers and crew on board government vessels and hospital personnel; hazard pay; allowances of foreign service personnel stationed abroad; and such other additional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed included in the standardized salary rates herein prescribed. 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.

The Court emphasized that this provision applied to all NAPOCOR employees, regardless of their hiring date. The COLA and AA were considered integrated into the standardized salaries, preventing any basis for distinguishing between those hired before and after July 1, 1989. Any other interpretation, the Court noted, would lead to salary distortions and unequal protection under the law. It was also clarified that those hired after the implementation of Republic Act No. 6758 did not receive a lesser compensation package than those hired before.

The Court also addressed the transition allowance provided under Section 17 of Republic Act No. 6758. This allowance was designed to prevent a decrease in pay when the standardized salary rates were implemented. It was not intended as an additional compensation but rather as a bridge to ensure that employees’ gross monthly income remained the same. Furthermore, the implementation of Republic Act No. 7648, the Electric Power Crisis Act of 1993, introduced a new compensation plan for NAPOCOR workers.

Under Republic Act No. 7648, NAPOCOR’s compensation structure was upgraded, and it ceased to be governed by the standardized salary rates of Republic Act No. 6758. Memorandum Order No. 198, issued by then President Fidel V. Ramos, provided for a different position classification and compensation plan, effective January 1, 1994. This new plan included the basic salary, Personal Economic Relief Allowance (PERA), Additional Compensation, Rice Subsidy, and Reimbursable Allowances. The President’s discretion to specify new salary rates was qualified by the mandate that “Nothing in this Section shall result in the diminution of the present salaries and benefits of the personnel of the NAPOCOR.”

The Court found the unions’ “Exhibit C” to be unpersuasive, as it was merely a collection list created after the trial court’s favorable ruling. The list specified names of employees and computations of their alleged entitlements, but these computations did not conclusively prove that the COLA and AA were actually withheld. Crucially, the Court pointed out that the unions failed to provide any pay slips or Notices of Position Allocation and Salary Adjustment demonstrating an actual deduction of the COLA and AA during the relevant period. The Court concluded that the unions had not proven that their COLA and AA were factually deducted from their basic pay.

This case underscores the importance of clear and convincing evidence in legal proceedings. It also highlights the Court’s commitment to upholding the principles of standardized compensation and equal protection under the law. The denial of the motion for reconsideration solidifies the Court’s stance on the integration of allowances into standardized salaries and reinforces the need for consistency in the application of compensation laws within the civil service.

FAQs

What was the central issue in this case?	The central issue was whether the Cost of Living Allowance (COLA) and Amelioration Allowance (AA) of NAPOCOR employees were already integrated into their standardized salaries under Republic Act No. 6758. The employees claimed these allowances were unlawfully withheld from their paychecks.
What is Republic Act No. 6758?	Republic Act No. 6758, also known as the Compensation and Position Classification Act of 1989, aimed to standardize the salary rates of government employees. Section 12 of the Act mandates the consolidation of allowances, including COLA and AA, into standardized salary rates.
What did the Regional Trial Court initially decide?	The Regional Trial Court initially ruled in favor of the NAPOCOR employees, ordering NAPOCOR to pay a substantial amount in back COLA and AA, along with legal interest. However, this decision was later reversed by the Supreme Court.
What was the Supreme Court’s ruling?	The Supreme Court ruled that the COLA and AA of NAPOCOR employees were already integrated into their standardized salaries under Republic Act No. 6758 and Memorandum Order No. 198. Therefore, the employees were not entitled to additional payments for these allowances during the contested period.
What evidence did the NAPOCOR employees present?	The NAPOCOR employees presented “Exhibit C” as evidence, which they claimed proved that their basic pay did not include the disputed allowances. However, the Supreme Court found this evidence unpersuasive.
Why did the Supreme Court reject the employees’ claim?	The Supreme Court rejected the employees’ claim because they failed to provide any pay slips or Notices of Position Allocation and Salary Adjustment demonstrating an actual deduction of the COLA and AA during the relevant period.
What is the significance of Memorandum Order No. 198?	Memorandum Order No. 198, issued by President Fidel V. Ramos, provided for a different position classification and compensation plan for NAPOCOR employees, effective January 1, 1994. This new plan included the basic salary, PERA, Additional Compensation, Rice Subsidy, and Reimbursable Allowances.
What is the Electric Power Crisis Act of 1993?	The Electric Power Crisis Act of 1993 (Republic Act No. 7648) authorized the President to reorganize NAPOCOR and upgrade its compensation plan. This law led to NAPOCOR ceasing to be covered by the standardized salary rates of Republic Act No. 6758.

In conclusion, the Supreme Court’s resolution reinforces the principle that allowances integrated into standardized salaries under Republic Act No. 6758 are not subject to additional payments. This decision ensures consistency in the application of compensation laws and prevents salary distortions within the civil service. It also underscores the importance of presenting clear and convincing evidence in legal proceedings.

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: Republic vs. Cortez, G.R. Nos. 187257 & 187776, August 8, 2017