Case Digestcasd

7/27/2019 Case Digestcasd

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Republic of the PhilippinesSUPREME COURT

ManilaEN BANC

G.R. No. L-20089 December 26, 1964BEATRIZ P. WASSMER, plaintiff-appellee,vs.FRANCISCO X. VELEZ, defendant-appellant.Jalandoni & Jamir for defendant-appellant.Samson S. Alcantara for plaintiff-appellee.

BENGZON, J.P., J.:

The facts that culminated in this case started with dreams and hopes, followed by appropriate planning and serious endeavors,but terminated in frustration and, what is worse, complete public humiliation.

Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get married and set September 4,1954 as the big day. On September 2, 1954 Velez left this note for his bride-to-be:

Dear Bet

Will have to postpone wedding My mother opposes it. Am leaving on the Convair today.

Please do not ask too many people about the reason why That would only create a scandal.

Paquing

But the next day, September 3, he sent her the following telegram:

NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE MAMA PAPA LOVE .

PAKING

Thereafter Velez did not appear nor was he heard from again.

Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff adduced evidence before the clerk ofcourt as commissioner, and on April 29, 1955, judgment was rendered ordering defendant to pay plaintiff P2,000.00 as actualdamages; P25,000.00 as moral and exemplary damages; P2,500.00 as attorney's fees; and the costs.

On June 21, 1955 defendant filed a "petition for relief from orders, judgment and proceedings and motion for new trial andreconsideration." Plaintiff moved to strike it cut. But the court, on August 2, 1955, ordered the parties and their attorneys toappear before it on August 23, 1955 "to explore at this stage of the proceedings the possibility of arriving at an amicablesettlement." It added that should any of them fail to appear "the petition for relief and the opposition thereto will be deemedsubmitted for resolution."

On August 23, 1955 defendant failed to appear before court. Instead, on the following day his counsel filed a motion to defer fortwo weeks the resolution on defendants petition for relief. The counsel stated that he would confer with defendant in Cagayan deOro City the latter's residence on the possibility of an amicable element. The court granted two weeks counted from August25, 1955.

Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on September 8, 1955 but thatdefendant and his counsel had failed to appear.


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Another chance for amicable settlement was given by the court in its order of July 6, 1956 calling the parties and their attorneysto appear on July 13, 1956. This time. however, defendant's counsel informed the court that chances of settling the caseamicably were nil.

On July 20, 1956 the court issued an order denying defendant's aforesaid petition. Defendant has appealed to this Court. In hispetition of June 21, 1955 in the court a quo defendant alleged excusable negligence as ground to set aside the judgment by

default. Specifically, it was stated that defendant filed no answer in the belief that an amicable settlement was being negotiated.

A petition for relief from judgment on grounds of fraud, accident, mistake or excusable negligence, must be duly supported by anaffidavit of merits stating facts constituting a valid defense. (Sec. 3, Rule 38, Rules of Court.) Defendant's affidavit of meritsattached to his petition of June 21, 1955 stated: "That he has a good and valid defense against plaintiff's cause of action, hisfailure to marry the plaintiff as scheduled having been due to fortuitous event and/or circumstances beyond his control." Anaffidavit of merits like this stating mere conclusions or opinions instead of facts is not valid. (Cortes vs. Co Bun Kim, L-3926, Oct.10, 1951; Vaswani vs. P. Tarrachand Bros., L-15800, December 29, 1960.)

Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or a mere surplusage, because thejudgment sought to be set aside was null and void, it having been based on evidence adduced before the clerk of court. InProvince ofPangasinan vs. Palisoc, L-16519, October 30, 1962, this Court pointed out that the procedure of designating theclerk of court as commissioner to receive evidence is sanctioned by Rule 34 (now Rule 33) of the Rules of Court. Now as to

defendant's consent to said procedure, the same did not have to be obtained for he was declared in default and thus had nostanding in court (Velez vs. Ramas, 40 Phil. 787; Alano vs. Court of First Instance, L-14557, October 30, 1959).

In support of his "motion for new trial and reconsideration," defendant asserts that the judgment is contrary to law. The reasongiven is that "there is no provision of the Civil Code authorizing" an action for breach of promise to marry. Indeed, our ruling inHermosisima vs. Court of Appeals (L-14628, Sept. 30, 1960), as reiterated in Estopa vs. Biansay(L-14733, Sept. 30, 1960), isthat "mere breach of a promise to marry" is not an actionable wrong. We pointed out that Congress deliberately eliminated fromthe draft of the new Civil Code the provisions that would have it so.

It must not be overlooked, however, that the extent to which acts not contrary to law may be perpetrated with impunity, is notlimitless for Article 21 of said Code provides that "any person who wilfully causes loss or injury to another in a manner that iscontrary to morals, good customs or public policy shall compensate the latter for the damage."

The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to contract marriage, which wassubsequently issued (Exhs. A, A-1). Their wedding was set for September 4, 1954. Invitations were printed and distributed torelatives, friends and acquaintances (Tsn., 5; Exh. C). The bride-to-be's trousseau, party drsrses and other apparel for theimportant occasion were purchased (Tsn., 7-8). Dresses for the maid of honor and the flower girl were prepared. A matrimonialbed, with accessories, was bought. Bridal showers were given and gifts received (Tsn., 6; Exh. E). And then, with but two daysbefore the wedding, defendant, who was then 28 years old,: simply left a note for plaintiff stating: "Will have to postpone wedding My mother opposes it ... " He enplaned to his home city in Mindanao, and the next day, the day before the wedding, he wiredplaintiff: "Nothing changed rest assured returning soon." But he never returned and was never heard from again.

Surely this is not a case ofmere breach of promise to marry. As stated, mere breach of promise to marry is not an actionablewrong. But to formally set a wedding and go through all the above-described preparation and publicity, only to walk out of it whenthe matrimony is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to good customs for whichdefendant must be held answerable in damages in accordance with Article 21 aforesaid.

Defendant urges in his afore-stated petition that the damages awarded were excessive. No question is raised as to the award ofactual damages. What defendant would really assert hereunder is that the award of moral and exemplary damages, in theamount of P25,000.00, should be totally eliminated.

Per express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned inArticle 21 of said Code. As to exemplary damages, defendant contends that the same could not be adjudged against himbecause under Article 2232 of the New Civil Code the condition precedent is that "the defendant acted in a wanton, fraudulent,reckless, oppressive, or malevolent manner." The argument is devoid of merit as under the above-narrated circumstances of this


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case defendant clearly acted in a "wanton ... , reckless [and] oppressive manner." This Court's opinion, however, is thatconsidering the particular circumstances of this case, P15,000.00 as moral and exemplary damages is deemed to be areasonable award.

PREMISES CONSIDERED, with the above-indicated modification, the lower court's judgment is hereby affirmed, with costs.

The Case

This is a petition for review[1]of the Decision[2]dated 13 August 1998 and the Resolution dated 10 March 1999 of theCourt of Appeals in CA-G.R. SP No. 43134. The Court of Appeals affirmed with modification the decision of the trial court byordering the payment of P18,000 monthly rental starting 19 December 1995 until Car Cool Philippines, Inc. vacates thepremises.

The Fact

On 19 December 1995, Ushio Realty and Development Corporation (USHIO Realty) filed an ejectment case againstCar Cool Philippines, Inc. (CAR COOL) to recover possession of a parcel of land (property) located at No. 72 (137) Quezon

Avenue, corner Victory Avenue, Quezon City.

USHIO Realty alleges that the former owners of the property, Spouses Hector and Gloria Hizon Lopez (Spouses Lopez),leased the property to CAR COOL since 1972. In 1990, the Spouses Lopez and CAR COOL executed a written lease agreementover the property for two years. On 16 August 1992, on the expiration of the written lease agreement, the Spouses Lopezallowed CAR COOL to continue occupying the property upon payment of monthly rentals. Later, a verbal month-to-month leaseagreement continued until 31 August 1995. On 15 June 1995, Hector Lopez wrote CAR COOL to inform it of his intention to sellthe property. Hector Lopez gave CAR COOL the option to buy the property before offering the same to other prospective buyers.

CAR COOL failed to respond to the offer. On 28 June 1995, Hector Lopez terminated the verbal lease agreement and gave CARCOOL until 31 August 1995 to vacate the property. In his subsequent letters dated 22 July, 1 August and 12 August 1995, HectorLopez reiterated his demand for CAR COOL to vacate the property. CAR COOL allegedly ignored the demands to vacate theproperty and continued to occupy the same.

In a letter dated 31 August 1995, USHIO Realty informed CAR COOL that it had purchased the property from the SpousesLopez. USHIO Realty gave CAR COOL another 30 days from 31 August 1995 to vacate the property. CAR COOL failed to
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respond to the demand letter and continued to occupy the property. On 3 December 1995, USHIO Realty sent a final demand toCAR COOL, giving it a non-extendible 15 days within which to vacate the property. CAR COOL refused to vacate the property,prompting USHIO Realty to file the complaint for ejectment on 19 December 1995.

CAR COOL, on the other hand, alleges that USHIO Realty was aware of the lease agreement between CAR COOL andthe former owner, Hector Lopez. According to CAR COOL, on 20 January 1995, Hector Lopez agreed to renew the lease for

another two years to cover the period from 1 January 1995 to December 1996, for a monthly rental of P18,000 and an additionalsecurity deposit of P216,000. In compliance with the agreement to renew the lease, CAR COOL claims that it paid in advanceto Hector Lopez P205,200 representing the monthly rentals for the period from 1 January 1995 to 31 December 1995.CAR COOL also claims to have paid in advance P205,200 covering monthly rentals for the period from 1 January 1996 to 31December 1996, plus P216,000 as additional security deposit for 1 January 1996 to 1 January 1997. Upon his receipt of theadvance rentals and security deposit, Hector Lopez allegedly promised to execute a written contract of lease for two yearscovering the period from 1 January 1995 to 31 December 1996.

CAR COOL further alleges that USHIO Realty, despite its knowledge of the lease agreement, still demanded that CARCOOL vacate the property on the ground that USHIO Realty had already bought the property from the Spouses Lopez. On 1October 1995, USHIO Realty allegedly broke into the leased premises, demolished the improvements on the premises, andthreatened and inflicted bodily injuries upon two employees of CAR COOL. Virgilio de la Rosa, CAR COOLs President andGeneral Manager, was able to enter the leased premises the following day and found some personal items missing. On 9

October 1995, CAR COOL filed a complaint-affidavit against the agents and representative of USHIO Realty for robbery withforce upon things and malicious mischief.[3] CAR COOL later amended the complaint-affidavit to include the charge of gravecoercion.[4]

On 21 November 1995, CAR COOL filed a complaint for specific performance and damages with the Regional TrialCourt of Quezon City. The complaint sought to compel Hector Lopez to execute a written lease contract for the period from 1January 1995 until 31 December 1996 and for USHIO Realty to be bound by the contract.

On 19 June 1996, the Metropolitan Trial Court rendered a decision in the ejectment case in favor of USHIO Realty. Thedispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff USHIORealty Development Corporation and against the defendant CAR COOL Philippines, Inc. represented by

President and General Manager Virgilio dela Rosa as follows:

1. Ordering the defendant and all persons claiming right under her to surrender the possession of thepremises to the plaintiff and vacate therefrom;

2. Ordering the defendant to pay plaintiff the amount of P18,000.00 per month as reasonablecompensation for the use of the premises beginning October 1995 and every month thereafter untilthe premises is finally vacated;

3. Defendant to pay plaintiff the sum of P20,000.00 as and by way of attorneys fees; and 4. Defendant to pay [the] cost.

SO ORDERED.

CAR COOL appealed to the Regional Trial Court. On 28 October 1996, the Regional Trial Court rendered its decisionaffirming the decision of the Metropolitan Trial Court.

On appeal, the Court of Appeals affirmed the trial courts decision with the modification that the payment of P18,000monthly rental should start from 19 December 1995 until CAR COOL finally vacates the property. The Court of Appeals held thatCAR COOLs possession of the property became unlawful only on 19 December 1995, upon receipt of the demand to vacate theproperty and CAR COOLs refusal to surrender possession.[6]

On 15 September 1998, CAR COOL filed a motion for reconsideration, which the Court of Appeals denied. Hence, theinstant petition.
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The Issue

CAR COOL raises the sole issue of whether the Court of Appeals erred in awarding damages by way of rentals andattorneys fees in favor of USHIO.[7]

The Ruling of the Court

We find the petition partly meritorious.

Award of damages in the form of rentals

CAR COOL asserts that to award damages to USHIO Realty would constitute unjust enrichment at the expense of CARCOOL. CAR COOL claims that it never benefited from its occupation of the property after USHIO Realtys agents entered theproperty on 1 October 1995 and unlawfully destroyed CAR COOLs office, equipment and spare parts. Because of thedestruction of the equipment and spare parts needed to operate its business, CAR COOL asserts that it was no longer possibleto continue its business operations.[8]

We are not convinced.

Rule 70 of the Rules of Civil Procedure, which governs the rule on ejectment (forcible entry and unlawful detainer),provides under Sections 17 and 19 that

Sec. 17. Judgment. If after trial the court finds that the allegations of the complaint are true, it shallrender judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as arrears ofrent or as reasonable compensation for the use and occupation of the premises, attorneys fees andcosts. If it finds that said allegations are not true, it shall render judgment for the defendant to recover hiscosts. If a counterclaim is established, the court shall render judgment for the sum found in arrears fromeither party and award costs as justice requires. (Emphasis supplied)

Sec. 19. Immediate execution of judgment; how to stay same. If judgment is rendered against thedefendant, execution shall issue immediately upon motion, unless an appeal has been perfected and thedefendant to stay execution files a sufficient supersedeas bond, approved by the Municipal Trial Court andexecuted in favor of the plaintiff to pay the rents, damages, and costs accruing down to the time of the

judgment appealed from, and unless, during the pendency of the appeal, he deposits with the appellatecourt the amount of rent due from time to time under the contract, if any, as determined by the judgment ofthe Municipal Trial Court. In the absence of a contract, he shall deposit with the Regional Trial Courtthe reasonable value of the use and occupation of the premises for the preceding month or periodat the rate determined by the judgment of the lower court on or before the tenth day of eachsucceeding month or period. The supersedeas bond shall be transmitted by the Municipal Trial Court,with the other papers, to the clerk of the Regional Trial Court to which the action is appealed. (Emphasissupplied)

In this case, there is no dispute on the ownership of the property. An Absolute Deed of Sale dated 14 September 1995shows that the Spouses Lopez sold the property to USHIO Realty .[9]On 19 September 1995, the Registry of Deeds of QuezonCity issued a Transfer Certificate of Title for the property in the name of USHIO Realty .[10]On 3 December 1995, USHIO Realtysent a final demand to CAR COOL, giving it a non-extendible 15 days within which to vacate the property. When CAR COOL stillrefused to vacate the property, USHIO Realty filed the complaint for ejectment on 19 December 1995.

USHIO Realty, as the new owner of the property, has a right to physical possession of the property .[11]Since CARCOOL deprived USHIO Realty of its property, CAR COOL should pay USHIO Realty rentals as reasonable compensation for theuse and occupation of the property.
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Contrary to CAR COOLs allegations, the payment of damages in the form of rentals for the property does notconstitute unjust enrichment. The Court of Appeals held:

x x x [T]he alleged payment by the petitioner as rentals were given to the former owner (Lopez) and not tothe private respondent who was not privy to the transaction. As a matter of fact, it never benefited financiallyfrom the alleged transaction. Aside from that, the postdated checks the private respondent admitted to have

received, as rental payments for September to December 1995, were never encashed. On the contrary, theprivate respondent even offered to return the same to the petitioner, but was refused. [T]herefore, it did notamount to payment.[12]

We have held that [t]here is unjust enrichment when a person unjustly retains a benefit to the loss of another, or whena person retains money or property of another against the fundamental principles of justice, equity and good conscience. [13]

Article 22 of the Civil Code provides that [e]very person who through an act of performance by another, or any other means,acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same tohim. The principle of unjust enrichment under Article 22 requires two conditions: (1) that a person is benefited without a validbasis or justification, and (2) that such benefit is derived at anothers expense or damage .[14]

There is no unjust enrichment when the person who will benefit has a valid claim to such benefit. Under Section 17 ofRule 70 of the Rules of Civil Procedure, USHIO Realty has the legal right to receive some amount as reasonable compensation

forCAR COOLs occupation of the property.[15]Thus, in Benitez v. Court of Appeals,[16]we held that:

xxx Damages are recoverable in ejectment cases under Section 8, Rule 70 of the Revised Rules of Court.These damages arise from the loss of the use and occupation of the property, and not the damages whichprivate respondents may have suffered but which have no direct relation to their loss of material possession.Damages in the context of Section 8, Rule 70 is limited to rent or fair market value for the use andoccupation of the property.

The Metropolitan Trial Court and the Regional Trial Court assessed against CAR COOL the amount of P18,000 permonth as reasonable compensation for CAR COOLs use of the property. Both trial courts held that the P18,000 monthlypayment should run from October 1995 until CAR COOL vacates the property. The Court of Appeals sustained the P18,000monthly rental but held that the start of payment should be from 19 December 1995 until CAR COOL vacates the property.

The records show that CAR COOL already vacated the property on 18 November 1996. The Sheriff of the RegionalTrial Court of Quezon City certified that on 18 November 1996, he turned over the possession of the property to USHIORealty.[17] Thus, the P18,000 monthly rental for the use of the property should run from 19 December 1995 until 18 November1996 or a period of 11 months. Therefore, the total amount due as reasonable compensation for the use of the property isP198,000.[18] The trial court established this amount with reasonable accuracy or certainty because the trial court based thisamount on the latest monthly rental CAR COOL paid the previous owner of the property .[19] Accordingly, this amount shouldearn interest at 6 percent per annum from 19 November 1996 until finality of this decision, after which the accrued interest,together with the P198,000, shall earn interest at 12 percent per annum until full payment.[20]

Attorneys Fees

We cannot sustain the award of attorneys fees. The Court of Appeals failed to state explicitly in its decision the basis forthe award of attorneys fees. The award of attorneys fees is the exception rather than the rule and the court must state exp licitlythe legal reason for the award of attorneys fees.[21]In ABS-CBN Broadcasting Corp. v. CA,[22]we held that:

The general rule is that attorneys fees cannot be recovered as part of damages because of thepolicy that no premium should be placed on the right to litigate. They are not to be awarded every time aparty wins a suit. The power of the court to award at torneys fees under Article 2208 demands factual, legal,and equitable justification. Even when a claimant is compelled to litigate with third persons or to incurexpenses to protect his rights, still attorneys fees may not be awarded where no sufficient showing of bad
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faith could be reflected in a partys persistence in a case other than an erroneous conviction of therighteousness of his cause.

WHEREFORE, we AFFIRM the Decision dated 13 August 1998 and the Resolution dated 10 March 1999 of the Court ofAppeals in CA-G.R. SP No. 43134 with the MODIFICATION that the P18,000 monthly rental for the use of the property shouldrun from 19 December 1995 until 18 November 1996, aggregating P198,000. This amount shall earn 6 percent interest perannum from 19 November 1996 until finality of this decision, after which the accrued interest, together with the P198,000, shallearn interest at 12 percent per annum until full payment. We delete the award of attorneys fees. Costs against petitioner.

SO ORDERED.

THIRD DIVISION

[G.R. No. 141536. February 26, 2001]

GIL MIGUEL T. PUYAT,petitioner, vs. RON ZABARTE, respondent.

D E C I S I O N

PANGANIBAN, J.:

Summary judgment in a litigation is resorted to if there is no genuine issue as to any material fact, other than the amount ofdamages. If this verity is evident from the pleadings and the supporting affidavits, depositions and admissions on file with thecourt, the moving party is entitled to such remedy as a matter of course.

The Case

Before us is a Petition for Review on Certiorariunder Rule 45 of the Rules of Court, challenging the August 31, 1999 Decisioni[1]of the Court of Appeals (CA), which affirmed the Regional Trial Court (RTC) of Pasig City, Branch 67 in Civil Case No. 64107;and the January 20, 2000 CA Resolutionii[2] which denied reconsideration.

The assailed CA Decision disposed as follows:

WHEREFORE, finding no error in the judgment appealed from, the same is AFFIRMED." iii[3]

The Facts

The facts of this case, as narrated by the Court of Appeals, are as follows: iv[4]

It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an action] to enforce the money judgmentrendered by the Superior Court for the State of California, County of Contra Costa, U.S.A. On 18 March 1994, [petitioner] filedhis Answer with the following special and affirmative defenses:

x x x x x x x x x


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8) The Superior Court for the State of California, County of Contra Costa[,] did not properly acquire jurisdiction over thesubject matter of and over the persons involved in [C]ase #C21-00265.

9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265 dated December 12, 1991 was obtainedwithout the assistance of counsel for [petitioner] and without sufficient notice to him and therefore, was rendered in clear violationof [petitioners] constitutional rights to substantial and procedural due process.

10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 was procured bymeans of fraud or collusion or undue influence and/or based on a clear mistake of fact and law.

11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 is contrary to thelaws, public policy and canons of morality obtaining in the Philippines and the enforcement of such judgment in the Philippineswould result in the unjust enrichment of [respondent] at the expense of [petitioner] in this case.

12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 is null and void andunenforceable in the Philippines.

13) In the transaction, which is the subject matter in Case #C21-00265, [petitioner] is not in any way liable, in fact and inlaw, to [respondent] in this case, as contained in [petitioners] Answer to Complaint in Case #C21 -00265 dated April 1, 1991,

Annex B of [respondents] Complaint dated December 6, 1993.

14) [Respondent] is guilty of misrepresentation or falsifica tion in the filing of his Complaint in this case dated December 6,1993. Worse, [respondent] has no capacity to sue in the Philippines.

15) Venue has been improperly laid in this case.

(Record, pp. 42-44)

On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment under Rule 34 of the Rules of Court allegingthat the [A]nswer filed by [petitioner] failed to tender any genuine issue as to the material facts. In his [O]pposition to[respondents] motion, [petitioner] demurred as follows:

2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention that in his Answer with Special and AffirmativeDefenses dated March 16, 1994 [petitioner] has interposed that the Judgment on Stipulations for Entry in Judgment is null andvoid, fraudulent, illegal and unenforceable, the same having been obtained by means of fraud, collusion, undue influence and/orclear mistake of fact and law. In addition, [he] has maintained that said Judgment on Stipulations for Entry in Judgment wasobtained without the assistance of counsel for [petitioner] and without sufficient notice to him and therefore, was rendered inviolation of his constitutional rights to substantial and procedural due process.

The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August 1994 during which [respondent] marked andsubmitted in evidence the following:

Exhibit A - x x x Judgment on Stipulation For Entry In Judgment of the Supreme Court of the State ofCalifornia[,] County of Contra Costa[,] signed by Hon. Ellen James, Judge of the Superior Court.

Exhibit B - x x x Certificate of Authentication of the [O]rder signed by the Hon. Ellen James, issued by theConsulate General of the Republic of the Philippines.

Exhibit C - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the sheriff/marshall,County of Santa Clara, State of California.

Exhibit D - [W]rit of [E]xecution


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1. That his Answer failed to tender a genuine issue of fact regarding the following:

(a) the jurisdiction of a foreign court over the subject matter

(b) the validity of the foreign judgment

(c) the judgments conformity to Philippine laws, public policy, canons of morality, and norms against unjustenrichment

2. That the principle offorum non conveniens was inapplicable to the instant case.

This Courts Ruling

The Petition has no merit.

First Question: Summary Judgment

Petitioner vehemently insists that summary judgment is inappropriate to resolve the case at bar, arguing that his Answer

allegedly raised genuine and material factual matters which he should have been allowed to prove during trial.

On the other hand, respondent argues that the alleged genuine issues of fact raised by petitioner are mere conclusions of l aw,or propositions arrived at not by any process of natural reasoning from a fact or a combination of facts stated but by theapplication of the artificial rules of law to the facts pleaded.xi[11]

The RTC granted respondents Motion for Summary Judgment because petitioner, in his Answer, admitted the existence of theJudgment on Stipulation for Entry in Judgment. Besides, he had already paid $5,000 to respondent, as provided in the foreign

judgment sought to be enforced.xii[12] Hence, the trial court ruled that, there being no genuine issue as to any material fact, thecase should properly be resolved through summary judgment. The CA affirmed this ruling.

We concur with the lower courts. Summary judgment is a procedural device for the prompt disposition of actions in which thepleadings raise only a legal issue, and not a genuine issue as to any material fact. By genuine issue is meant a question of fact

that calls for the presentation of evidence. It should be distinguished from an issue that is sham, contrived, set in bad faith andpatently unsubstantial.xiii[13]

Summary judgment is resorted to in order to avoid long drawn out litigations and useless delays. When affidavits, depositionsand admissions on file show that there are no genuine issues of fact to be tried, the Rules allow a party to pierce the allegationsin the pleadings and to obtain immediate relief by way of summary judgment. In short, since the facts are not in dispute, thecourt is allowed to decide the case summarily by applying the law to the material facts.

Petitioner contends that by allowing summary judgment, the two courts a quo prevented him from presenting evidence tosubstantiate his claims. We do not agree. Summary judgment is based on facts directly proven by affidavits, depositions oradmissions.xiv[14] In this case, the CA and the RTC both merely ruled that trial was not necessary to resolve the case.

Additionally and correctly, the RTC specifically ordered petitioner to submit opposing affidavits to support his contentions that (1)the Judgment on Stipulation for Entry in Judgment was procured on the basis of fraud, collusion, undue influence, or a clearmistake of law or fact; and (2) that it was contrary to public policy or the canons of morality. xv[15]

Again, in its Orderxvi[16]dated November 29, 1995, the trial court clarified that the opposing affidavits were for [petitioner] tospell out the facts or circumstances [that] would constitute lack of jurisdiction over the subject matter of and over the personsinvolved in Case No. C21-00265, and that would render the judgment therein null and void. In this light, petitioners contentionthat he was not allowed to present evidence to substantiate his claims is clearly untenable.

For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a) that there must be no genuine issue asto any material fact, except for the amount of damages; and (b) that the party presenting the motion for summary judgment must


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be entitled to a judgment as a matter of law.xvii[17] As mentioned earlier, petitioner admitted that a foreign judgment had beenrendered against him and in favor of respondent, and that he had paid $5,000 to the latter in partial compliance therewith.Hence, respondent, as the party presenting the Motion for Summary Judgment, was shown to be entitled to the judgment.

The CA made short shrift of the first requirement. To show that petitioner had raised no genuine issue, it relied instead on thefinality of the foreign judgment which was, in fact, partially executed. Hence, we shall show in the following discussion how the

defenses presented by petitioner failed to tender any genuine issue of fact, and why a full-blown trial was not necessary for theresolution of the issues.

Jurisdiction

Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership interest, was vested in the Securitiesand Exchange Commission, not in the Superior Court of California, County of Contra Costa.

We disagree. In the absence of proof of California law on the jurisdiction of courts, we presume that such law, if any, is similar toPhilippine law. We base this conclusion on the presumption of identity or similarity, also known as processualpresumption.xviii[18] The Complaint,xix[19] which respondent filed with the trial court, was for the enforcement of a foreign

judgment. He alleged therein that the action of the foreign court was for the collection of a sum of money, breach of promissorynotes, and damages.xx[20]

In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the Securities and Exchange Commission (SEC).The jurisdiction of the latter is exclusively over matters enumerated in Section 5, PD 902-A,xxi[21]prior to its latest amendment.If the foreign court did not really have jurisdiction over the case, as petitioner claims, it would have been very easy for him toshow this. Since jurisdiction is determined by the allegations in a complaint, he only had to submit a copy of the complaint filedwith the foreign court. Clearly, this issue did not warrant trial.

Rights to Counsel and to Due Process

Petitioner contends that the foreign judgment, which was in the form of a Compromise Agreement, cannot be executed withoutthe parties being assisted by their chosen lawyers. The reason for this, he points out, is to eliminate collusion, undue influenceand/or improper exertion of ascendancy by one party over the other. He alleges that he discharged his counsel during theproceedings, because he felt that the latter was not properly attending to the case. The judge, however, did not allow him tosecure the services of another counsel. Insisting that petitioner settle the case with respondent, the judge practically imposedthe settlement agreement on him. In his Opposing Affidavit, petitioner states:

It is true that I was initially represented by a counsel in the proceedings in #C21 -00625. I discharged him because I then feltthat he was not properly attending to my case or was not competent enough to represent my interest. I asked the Judge for timeto secure another counsel but I was practically discouraged from engaging one as the Judge was insistent that I settle the caseat once with the [respondent]. Being a foreigner and not a lawyer at that I did not know what to do. I felt helpless and the Judgeand [respondents] lawyer were the ones telling me what to do. Under ordinary circumstances, their directives should have beentaken with a grain of salt especially so [since respondents] counsel, who was telling me what to do, ha d an interest adverse tomine. But [because] time constraints and undue influence exerted by the Judge and [respondents] counsel on me disturbed andseriously affected my freedom to act according to my best judgment and belief. In point of fact, the terms of the settlement werepractically imposed on me by the Judge seconded all the time by [respondents] counsel. I was then helpless as I had nocounsel to assist me and the collusion between the Judge and [respondents] counsel was becoming more evident by the way Iwas treated in the Superior Court of [t]he State of California. I signed the Judgment on Stipulation for Entry in Judgment withoutany lawyer assisting me at the time and without being fully aware of its terms and stipulations. xxii[22]

The manifestation of petitioner that the judge and the counsel for the opposing party had pressured him would gain credibilityonly if he had not been given sufficient time to engage the services of a new lawyer. Respondents Affidavitxxiii[23] dated May23, 1994, clarified, however, that petitioner had sufficient time, but he failed to retain a counsel. Having dismissed his lawyer asearly as June 19, 1991, petitioner directly handled his own defense and negotiated a settlement with respondent and his counselin December 1991. Respondent also stated that petitioner, ignoring the judges reminder of the importance of having a lawyer,argued that he would be the one to settle the case and pay anyway. Eventually, the Compromise Agreement was presented in


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court and signed before Judge Ellen James on January 3, 1992. Hence, petitioners rights to counsel and to due process werenot violated.

Unjust Enrichment

Petitioner avers that the Compromise Agreement violated the norm against unjust enrichment because the judge made him

shoulder all the liabilities in the case, even if there were two other defendants, G.S.P & Sons, Inc. and the Genesis Group.

We cannot exonerate petitioner from his obligation under the foreign judgment, even if there are other defendants who are notbeing held liable together with him. First, the foreign judgment itself does not mention these other defendants, their participationor their liability to respondent. Second, petitioners undated Opposing Affidavit states: [A]lthough myself and these entities wereinitially represented by Atty. Lawrence L. Severson of the Law Firm Kouns, Quinlivan & Severson, x x x I discharged x x x saidlawyer. Subsequently, I assumed the representation for myself and these firms and this was allowed by the Superior Court ofthe State of California without any authorization from G.G.P. & Sons, Inc. and the Genesis Group. xxiv[24] Clearly, it waspetitioner who chose to represent the other defendants; hence, he cannot now be allowed to impugn a decision based on thisground.

In any event, contrary to petitioners contention, unjust enrichment orsolutio indebitidoes not apply to this case. This doctrinecontemplates payment when there is no duty to pay, and the person who receives the payment has no right to receive it.xxv[25]

In this case, petitioner merely argues that the other two defendants whom he represented were liable together with him. This isnot a case of unjust enrichment.

We do not see, either, how the foreign judgment could be contrary to law, morals, public policy or the canons of moralityobtaining in the country. Petitioner owed money, and the judgment required him to pay it. That is the long and the short of thiscase.

In addition, the maneuverings of petitioner before the trial court reinforce our belief that his claims are unfounded. Instead offiling opposing affidavits to support his affirmative defenses, he filed a Motion for Reconsideration of the Order allowing summary

judgment, as well as a Motion to Dismiss the action on the ground offorum non conveniens. His opposing affidavits were filedonly after the Order of November 29, 1995 had denied both Motions.xxvi[26] Such actuation was considered by the trial court asa dilatory ploy which justified the resolution of the action by summary judgment. According to the CA, petitioners allegationssought to delay the full effects of the judgment; hence, summary judgment was proper. On this point, we concur with both

courts.

Second Question: Forum Non Conveniens

Petitioner argues that the RTC should have refused to entertain the Complaint for enforcement of the foreign judgment on theprinciple offorum non conveniens. He claims that the trial court had no jurisdiction, because the case involved partnershipinterest, and there was difficulty in ascertaining the applicable law in California. All the aspects of the transaction took place in aforeign country, and respondent is not even Filipino.

We disagree. Under the principle offorum non conveniens, even if the exercise of jurisdiction is authorized by law, courts maynonetheless refuse to entertain a case for any of the following practical reasons:

1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the case transpiredin a foreign jurisdiction or the material witnesses have their residence there;

2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,]merely to secureprocedural advantages or to convey or harass the defendant;

3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may already be overcrowded;

4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and


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The difficulty of ascertaining foreign law.xxvii[27]

None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the present action, there was no moreneed for material witnesses, no forum shopping or harassment of petitioner, no inadequacy in the local machinery to enforce theforeign judgment, and no question raised as to the application of any foreign law.

Authorities agree that the issue of whether a suit should be entertained or dismissed on the basis of the above-mentionedprinciple depends largely upon the facts of each case and on the sound discretion of the trial court.xxviii[28] Since the presentaction lodged in the RTC was for the enforcement of a foreign judgment, there was no need to ascertain the r ights and theobligations of the parties based on foreign laws or contracts. The parties needed only to perform their obligations under theCompromise Agreement they had entered into.

Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action in personam rendered by a foreigntribunal clothed with jurisdiction is presumptive evidence of a right as between the parties and their successors-in-interest by asubsequent title.xxix[29]

Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere -- enjoys the presumption that it is actingin the lawful exercise of its jurisdiction, and that it is regularly performing its official duty. xxx[30] Its judgment may, however, beassailed if there is evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact. But

precisely, this possibility signals the need for a local trial court to exercise jurisdiction. Clearly, the application offorum noncoveniens is not called for.

The grounds relied upon by petitioner are contradictory. On the one hand, he insists that the RTC take jurisdiction over theenforcement case in order to invalidate the foreign judgment; yet, he avers that the trial court should not exercise jurisdiction overthe same case on the basis offorum non conveniens. Not only do these defenses weaken each other, but they bolster thefinding of the lower courts that he was merely maneuvering to avoid or delay payment of his obligation.

WHEREFORE, the Petition is hereby DENIEDand the assailed Decision and ResolutionAFFIRMED. Double costs againstpetitioner.

SO ORDERED.

G.R. No. 138381 April 16, 2002

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,vs.COMMISSION ON AUDIT, respondent.

x---------------------------------------------------------x

G.R. No. 141625 April 16, 2002

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,vs.ALFREDO D. PINEDA, DANIEL GO, FELINO BULANDUS, FELICIMO J. FERRARIS, JR., BEN HUR PORLUCAS, LUISHIPONIA, MARIA LUISA A. FERNANDEZ, VICTORINA JOVEN, CORAZON S. ALIWANAG, SILVER L. MARTINES, SR.,


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RENATO PEREZ, LOLITA CAYLAN, DOUGLAS VALLEJO and LETICIA ALMAZAN, on their own behalf and on behalf ofall GSIS retirees with all of whom they share a common and general interest, respondents.

YNARES-SANTIAGO, J.:

At the core of these two consolidated petitions is the determination of whether the Commission on Audit (COA) properlydisallowed on post-audit, certain allowances and/or fringe benefits granted to employees of the Government Service InsuranceSystem (GSIS), after the effectivity of Republic Act No. 6758, otherwise known as the Salary Standardization Law on July 1,1989.

I. G.R. No. 138381

In this special civil action for certiorari under Rule 65 in relation to Rule 64 of the 1997 Rules of Civil Procedure, petitioner GSISseeks the annulment of COA Decision No. 98-337 dated August 25, 1998, which affirmed the Resident Auditor's disallowance ofmonetary benefits granted to or paid by GSIS in behalf of its employees.

After the effectivity of R.A. No. 6758 on July 1, 1989, petitioner GSIS increasedthe following benefits of its personnel: a)longevity pay; b) children's allowance; c) housing allowance for its branch and assistant branch managers; and d) employer'sshare in the GSIS Provident Fund from 20% to 45% of basic salary for incumbent employees as of June 30, 1989.

The GSIS also remittedemployer's share to the GSIS Provident Fund for new employees hired after June 30, 1989, continuedthe payment of premiums for group personnel accident insurance and grantedloyalty cash award to its employees in addition toa service cash award.

Upon post-audit and examination, the GSIS Corporate Auditor disallowed the aforementioned allowances and benefits, citingSection 12 of R.A. No. 6758 in relation to sub-paragraphs 5.4 and 5.5 of its implementing rules, DBM Corporate CompensationCircular No. 10 (CCC No. 10). The first paragraph of Section 12, R.A. No. 6758 reads:

SEC. 12. Consolidation of Allowances and Compensation.- All allowances, except for representation and transportationallowances; 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 otheradditional compensation not otherwise specified herein as may be determined by the DBM, shall be deemed includedin 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 tobe authorized. x x x

Sub-paragraphs 5.4 and 5.5 of CCC No. 10,1meanwhile, supplemented Section 12 above by enumerating the additionalcompensation authorized to be continued for incumbent employees as of July 1, 1989.

According to the Corporate Auditor, R.A. No. 6758 authorized the continued grant of allowances/fringe benefits not integratedinto the standardized salary for incumbents as of June 30, 1989. However, these non-integrated benefits may not be increasedafter effectivity of the statute, without prior approval of the DBM or Office of the President or in the absence of legislativeauthorization in accordance with CCC No. 10. Explaining this position, the Corporate Auditor invoked COA Memorandum No. 90-

653 dated June 4, 1990, which states:

x x x While it is true that R.A. 6758 and Corporate Compensation Circular (CCC) No. 10 are silent with respect to theincrease of allowances/fringe benefits not integrated into the basic salary and allowed to be continued only forincumbents as of June 30, 1989, it would be inconsistent to allow further increase in said allowances and fringebenefits after July 1, 1989 since continuance thereof for incumbents is merely being tolerated unt il they vacate theirpresent positions for which they have been authorized to receive allowances/fringe benefits.2
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The Corporate Auditor also did not allow in audit the remittance of employer's share to the GSIS Provident Fund for new-hiresbecause the continuation of said benefit was only in favor of incumbents, as explicitly stated in the law. The payment of groupinsurance premiums covering all employees was likewise disallowed, for the reason that under sub-paragraph 5.6 of CCC No.10,3all fringe benefits granted on top of basic salary not otherwise enumerated under sub-paragraphs 5.4 and 5.5 thereof werealready discontinued effective November 1, 1989. As for the loyalty cash award and the service cash award, the Corporate

Auditor opined that only one of the two monetary incentives may be availed of by GSIS personnel.

On February 26, 1993, Mr. Julio Navarrete, Vice-President of the GSIS Human Resources Group, wrote to respondent COAappealing, in behalf of GSIS, the afore-stated disallowances by the Corporate Auditor. Mr. Navarrete averred that although it maybe conceded that the Salary Standardization Law did not extend the subject benefits to new-hires after the law's effectivity, theincrease thereof should nonetheless be allowed for incumbents since these benefits have been enjoyed by said employees evenprior to the passage of said law.4

In the case ofPhilippine Ports Authority v. Commission on Audit,5which involved a similar increase, after the enactment of R.A.No. 6758, in the representation and transportation allowance (RATA) of Philippine Ports Authority (PPA) employees, it was heldthat:

x x x the date July 1, 1989 does not serve as a cut-off date with respect to the amount of RATA. The date July 1, 1989

becomes crucial only to determine that as of said date, the officer was an incumbentand was receivingthe RATA, forpurposes of entitling him to its continued grant. This given date should not be interpreted as fixing the maximumamount of RATA to be received by the official.6

It was further alleged that contrary to the Corporate Auditor's contention, the GSIS Board of Trustees retained its power to fix anddetermine the compensation package for GSIS employees despite the passage of the Salary Standardization Law, pursuant toSection 36 of Presidential Decree No. 1146, as amended by Presidential Decree No. 1981, to wit:

Sec. 36. x x x

The Board of Trustees has the following powers and functions, among others:

x x x x x x x x x

(d) Upon the recommendation of the President and General Manager, to approve the System's organizational andadministrative structure and staffing pattern, and "to establish, fix, review, revise and adjust the appropriatecompensation package for the officers and employees of the System, with reasonable allowances, incentives,bonuses, privileges and other benefits as may be necessary or proper for the effective management, operation andadministration of the System." For the purpose of this and the preceding subsection, the System shall be exempt fromthe rules and requirements of the Office of the Budget and Management and the Office of the Compensation andPosition Classification;

x x x x x x x x x

Pursuant thereto, the GSIS Board of Trustees may validly increase and grant the subject benefits, even without securing the

imprimaturof the DBM, Office of the President or Congress.

On August 25, 1998, the COA affirmed the disallowances made by the Corporate Auditor and held that Section 36 of P.D. No.1146, as amended, was already repealed by Section 16 of R.A. No. 6758.7The COA similarly concluded that the GSIS Board ofTrustees may not unilaterally augment or grant benefits to its personnel, without the necessary authorization required under CCCNo. 10.8

GSIS filed a motion for reconsideration of the COA decision, invoking the ruling in De Jesus, et al. v. COA and Jamoralin.9Corporate Compensation Circular No. 10 (CCC No. 10) was declared to be of no legal force or effect due to its non-publication in
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the Official Gazette or a newspaper of general circulation. In view of this development, GSIS posited that the questioneddisallowances no longer had any leg to stand on and that COA should consequently lift the disallowances premised on CCC No.10.

On March 23, 1999, the COA denied the motion for reconsideration stating:

Although CCC No. 10 has been declared ineffective due to its non-publication as provided for in Article 2 of the CivilCode of the Philippines, the disallowances on the increased rates of the allowances/fringe benefits can still besustained because as ruled earlier, the power of the governing boards of corporations to fix compensation andallowances of personnel, including the authority to increase the rates, pursuant to their specific charters had alreadybeen repealed by Sec. 3 of P.D. 1597 and Section 16 of R.A. 6758. The other reasons or grounds relied upon by thepetitioner upon which the Motion is predicated have already been judiciously passed upon by this Commission when itrendered the subject COA Decision No. 98-337.

Accordingly, there being no new, sufficient and material evidence adduced as would warrant a reversal or modificationof the decision herein sought to be reconsidered, this Commission denies with finality the instant motion forreconsideration for utter lack of merit.10

Hence, this petition, challenging the above decision and resolution of the COA on the following grounds:

A.)RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OFJURISDICTION IN HOLDING THAT THE POWER SPECIFICALLY GRANTED BY PRESIDENTIAL DECREE NO.1146, AS AMENDED, TO THE GSIS BOARD OF TRUSTEES, TO ESTABLISH AND FIX THE APPROPRIATECOMPENSATION PACKAGE FOR GSIS OFFICERS AND EMPLOYEES HAS ALREADY BEEN REPEALED BYREPUBLIC ACT NO. 6758.

B.)RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OFJURISDICTION IN DENYING PETITONER'S MOTION FOR RECONSIDERATION DESPITE THE DECLARATION BYTHIS HONORABLE COURT IN THE CASE OF RODOLFO S. DE JESUS et al. vs. COMMISSION ON AUDIT andLEONARDO L. JAMORALIN, THAT CCC NO. 10 - THE MAIN BASIS OF THE QUESTIONED DISALLOWANCE - ISINVALID AND INEFFECTIVE FOR LACK OF THE REQUIRED PUBLICATION.11

II. G.R. No. 141625

This petition for review on certiorari under Rule 45 of the Rules of Court was precipitated by the factual antecedents of G.R. No.138381. While GSIS was appealing the disallowances made by the Corporate Auditor above, some of its employees retired andsubmitted the requisite papers for the processing of their retirement benefits. Since the retired employees received allowancesand benefits which had been disallowed by the Corporate Auditor, GSIS required them to execute deeds of consent that wouldauthorize GSIS to deduct from their retirement benefits the previously paid allowances, in case these were finally adjudged to beimproper. Some of the retired employees agreed to sign the deed, while others did not. Nonetheless, GSIS went ahead with thedeductions.

On April 16, 1998, a number of these retired GSIS employees12(hereafter referred to as "retirees") brought Case No. 001-98

before the GSIS Board of Trustees (hereafter referred to as "GSIS Board") questioning the legality of the deductions. Theyclaimed that COA disallowances can not be deducted from retirement benefits, considering that these were explicitly exemptedfrom such deductions under the last paragraph of Section 39, Republic Act No. 8291, which states:

SEC. 39. Exemption from Tax, Legal Process and Lien . - x x x

x x x x x x x x x
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The funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to thebenefits under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by thecourts, quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and fromall financial obligations of the members, including his pecuniary accountability arising from or caused or occasioned byhis exercise or performance of his official functions or duties, or incurred relative to or in connection with his position or

work except when his monetary liability, contractual or otherwise, is in favor of the GSIS .

The GSIS Board subsequently referred the case for hearing to its Corporate Secretary, Atty. Alicia Albert. Thereafter, the retireesand GSIS, through its Legal Services Group (LSG), entered into a stipulation of facts and agreed on a focal issue, namely:whether the COA disallowances may be legally deducted from the retirement benefits, on the premise that the same aremonetary liabilities of the retirees in favor of GSIS under Section 39 above. GSIS also insisted that since the deductions wereanchored on the disallowances made by the COA, the retirees' remedy was to ventilate the issue before said Commission andnot the GSIS Board.

Meanwhile, the De Jesus case mentioned in G.R. No. 138381 was promulgated, rendering CCC No. 10 legally ineffective. Thisprompted the hearing officer to suggest that the parties enter into an agreement as to what allowances and benefits are coveredby CCC No. 10, so that a partial decision can be rendered thereon. The retirees thus filed a motion for partial decision,submitting that there no longer existed any obstacle to the increase in allowances and benefits covered by CCC No. 10. These

allegedly include: a) GSIS management's share in the Provident Fund; b) initial payment of the productivity bonus; c)acceleration implementation of the new salary schedule effective August 1, 1995; d) increase in clothing allowance, riceallowance, meal subsidy, children's allowance and longevity pay; e) loyalty award; f) 1995 mid-year financial assistance; and g)other allowances as may be suggested by the Vice-President of the GSIS Human Resources Group.13

On November 25, 1998, GSIS filed an opposition to the retiree's motion for partial decision,14asserting that De Jesus had nobearing on the principal issue which, as agreed upon, was the interpretation of Section 39 of RA No. 8291. GSIS also filed oneven date, a motion to dismiss,15alleging that the nullity of CCC No. 10 rendered the petition moot and academic and paved theway for the payment of the controverted allowances earlier deducted from the retirement benefits.

Replying to the two pleadings filed by GSIS, the retirees countered that a motion to dismiss was a prohibited pleading underSection 14.13, Rule XIV of the GSIS Implementing Rules and Regulations.16Moreover, the retirees maintained that a motion todismiss may be filed in proceedings before the GSIS Board only prior to the filing of an answer which GSIS had already done.

Also, the LSG had previously agreed to a partial decision based on the De Jesus case; it could thus no longer take acontradictory stand by opposing the retiree's motion for partial decision.17

On January 14, 1999, the retirees filed a motion for summary judgment18claiming that there were no factual issues involved andthat the question raised in the petition was purely legal in nature. The matter was directly submitted to the GSIS Board for itsconsideration and resolution.

On March 3, 1999, the GSIS Board issued Resolution No. 72,19dismissing the petition. A motion for reconsideration filed by theretirees was also denied by the Board in its Resolution No. 16120dated May 18, 1999.

The matter was then elevated to the Court of Appeals, which rendered a decision on September 30, 1999, disposing as follows:

IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. Resolution No. 72, Annex "A" of the Petition andResolution No. 161 Annex "C" of the Petition are hereby SET ASIDE and NULLIFIED. The Hearing Officer of the Boardof Trustees of the Respondent is directed to proceed, with dispatch, with the proceedings of Case No. 001-98, asprovided for in the Rules and regulations implementing Republic Act 8291 (IRR).

SO ORDERED.21

The appellate court held that the motion to dismiss filed by the LSG before the GSIS Board is a prohibited pleading underapplicable GSIS rules. The GSIS also had jurisdiction over the retirees' petition, as it pertained to the interpretation andapplication of Section 39 of R.A. No. 8291, a law exclusively administered by the GSIS Board. Contrary to the LSG's
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submissions, the Court of Appeals ruled that there was no identity in subject matter between the retiree's petition and the appealfrom the auditor's disallowances filed by GSIS with the COA. Thus, the GSIS Board may take cognizance of the retirees' petitionindependently from the COA proceedings.

Hence, this second petition, assigning the following as errors:

I

THE COURT OF APPEALS ERRED IN RULING THAT THE BOARD OF TRUSTEES OF GSIS HAS JURISDICTION OVER THECASE.

II

THE COURT OF APPEALS ERRED IN RULING THAT THE CASE PENDING BEFORE THE SUPREME COURT ISDIFFERENT FROM THE PRESENT CASE.22

On August 20, 2001, the two petitions were consolidated.

During the pendency of these petitions, GSIS Board Resolution No. 79,23which authorized the Provident Fund rate increase forincumbent employees, was approved retroactively from March 1, 1994 by then President Joseph Estrada.24Thus, there nolonger appears to be any basis for disallowing the rate increase in management contribution to the Provident Fund from 20% to45% of the basic salary received by petitioner's incumbent employees. The presidential approval cured the lack of authorizationcited by respondent COA for disallowing this particular increase in benefit.

We now proceed to the resolution of the twin petitions.

Petitioner GSIS insists that the GSIS Board retained its power to increase the subject benefits under Section 36 of P.D. 1146, asamended (or the Revised GSIS Charter), despite the passage of R.A. No. 6758, particularly Section 16 thereof. The latter, whichis a general law, can not repeal or take precedence over the former because the Revised GSIS Charter is a special law thatspecifically exempts GSIS from Office of the Compensation and Position Classification coverage.

We need not delve lengthily into this submission as this was earlier laid to rest by the Court in Philippine International TradingCorporation (PITC) v. COA,25where we held that "the repeal by Section 16 of RA 6758 of 'all corporate charters that exemptagencies from the coverage of the system' was clear and expressednecessarily to achieve the purposes for which the law wasenacted, that is, the standardization of salaries of all employees in government owned and/or controlled corporations to achieve'equal pay for substantially equal work'."26As things now stand, GSIS is already exempt from salary standardization by expressprovision of R.A. 829127 a subsequent enactment approved on May 30, 1997 which amended the Revised GSIS Charter. Butsince GSIS was still governed by the latter at the time the increase in benefits were disallowed in audit, GSIS was then yetcovered by the Salary Standardization Law, thereby making our ruling in PITC presently relevant and applicable.

We now come to the legal propriety of the COA disallowances.

For purposes of clarity, a distinction must initially be made between those allowances which are deemed consolidated into thestandardized salary and those which are not under the terms of R.A. No. 6758. As correctly pointed out by petitioner GSIS, thehousing allowance, longevity pay and children's allowance are non-integratedbenefits, expressly made so by sub-paragraphs5.4 and 5.5 of CCC No. 10 in relation to the last sentence of Section 12 (par. 1), R.A. No. 6758. On the other hand, thepaymentof group personnel accident insurance premiums, loyalty cash award and service cash awardare not excluded from thestandardized salary by the same provisions of CCC No. 10 or R.A. No. 6758. These latter allowances are thus consideredintegrated into the basic salary and are treated differently under the same law.

A. NON-INTEGRATED BENEFITS AND ALLOWANCES
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a. Longevity Pay and Children's Allowance

As regards the increase in longevity pay and children's allowance, we find applicable our pronouncement in Philippine PortsAuthority(PPA) v. COA.28This case involved an adjustment in the representation and transportation allowance (RATA) ofincumbent PPA employees after the effectivity of R.A. No. 6758 on July 1, 1989. The RATA therein is similar to the longevity pay

and children's allowance subject of the instant petition, in the sense that: a) it is also a non-integrated allowance authorized to becontinued for incumbents under Section 12, R.A. No. 6758; and b) the rate thereof did not consist of a definite amount but wassubject to certain factors and/or stipulations that were nonetheless fixed before R.A. 6758 took effect.

In the PPA case, the adjustment was brought about by a corresponding increase in the employees' basic salary upon which the40% RATA was based. Respondent Commission disallowed the payment of RATA differentials arguing, as in this petition, thatthe RATA should be fixed at the prevailing rate prior to July 1, 1989, regardless of the increase in basic salary. It was postulatedtherein that consistent with the second sentence of said Section 12 (par. 1), the RATA should no longer be based on 40% ofbasic standardized salary but on the highest amount of RATA received by the incumbent as of July 1, 1989.

We rejected respondent COA's interpretation of Section 12 and held that the date July 1, 1989 should not be construed as a cut-off date for setting the amount of allowances authorized to be continued under said provision. The date July 1, 1989 is importantonly for determining whether an employee is an incumbent and receiving the allowance prior to the law's effectivity in order to

ascertain if such employee is qualified to its continued grant. It is not, however, to be interpreted as fixing the maximum amountof allowance that an incumbent employee is authorized to receive, but is only a qualifying date imposed by the statute.

Accordingly, the specific amount of longevity pay and children's allowance being received by an incumbent GSIS employee as ofJuly 1, 1989 is not to be considered as the highest amount authorized under the law.

It is thus evident that in adjusting the amount of allowances mentioned above, petitioner GSIS was merely complying with thepolicy of non-diminution of pay and benefits enunciated in R.A. No. 6758.29This policy does not only pertain specifically to theamount being received by the incumbent as of July 1, 1989, but also to the terms and conditions attached to these benefits priorto the passage of the statute. Relative to this, it should be noted that respondent COA did not dispute the fact that these benefits,including the terms and conditions thereof, are part of a compensation package granted by the GSIS Board to incumbents evenbefore R.A. 6758 took effect. In turn, this compensation package was incorporated in the 1978 GSIS Revised CompensationSystem approved by the President, upon recommendation of the Department of Budget and Management (DBM).

Thus, to peg the amount of these non-integrated allowances at the figure being received by the incumbent as of July 1, 1989would vary the terms of the benefits to which the incumbents are entitled. This could not have been the intendment of the statute,because such interpretation would effectively impair the incumbents' rights to these allowances, which have already accruedprior to July 1, 1989. In other words, before R.A. No. 6758 was enacted, incumbent GSIS employees had a fixed right to theseallowances under the terms and conditions then obtaining.30They could not therefore be excluded from its enjoyment under thesame terms and conditions without violating basic precepts of fairness and due process.

b. Housing Allowance

In contrast to the two preceding non-integrated benefits, it appears that the housing allowance given to petitioner's incumbentbranch and assistant branch managers before the passage of R.A. No. 6758 consisted of a fixed amount of P500.00 andP300.00 respectively. Said amounts were subsequently increased to P2,000.00 and P3,000.00 by virtue of GSIS BoardResolution No. 29431dated July 26, 1991.

As stated earlier, the power of the GSIS Board to "establish, fix, review, revise and adjust" the allowances, privileges and otherbenefits of its employees under Section 36 of the Revised GSIS Charter has been repealed by R.A. No. 6758.32As aconsequence, the GSIS Board may no longer grant any increase in housing allowance on its own voli tion after June 30, 1989.

Further, unlike the two preceding non-integrated benefits, it cannot be said that the affected branch and assistant branchmanagers acquired a vested right to any amount of housing allowance in excess of that granted to them before the passage ofR.A. No. 6758. They could not have been entitled to any amount other than that which was already determined before the law
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in the light of the clear ruling of the Civil Service Commission embodied in a letter dated May 12, 1993 that since bothbenefits have the same rationale, which is to reward long and dedicated service, "availment of the award can be madeonly under either system, whichever is more advantageous to the employees."39

The foregoing conclusion was apparently based on the position taken by Corporate Auditor Fe R. Munoz, who expounded

thereon in a second indorsement40dated December 14, 1993 as follows:

Service Cash Award is an incentive granted exclusively to any officer or employee of the GSIS who has rendered atleast fifteen (15) years continuous and dedicated service to the GSIS. It entitles them to receive amounts ranging fromP500.00 to P15,000.00 according to the number of years of service, pursuant to the provisions of the CollectiveBargaining Agreement (CBA), which payments are deducted by this Office from payment of Loyalty (Cash) Award. Onthe other hand, this should not be confused with the amount of Loyalty (Cash) Award in graduated amounts ofP1,200.00, P1,300.00, P1,400.00 and P1,500.00 for every year of service of GSIS executives and employees whohave completed at least ten (10) years of continuous service as authorized under Board Resolution No. 333 datedOctober 29, 1992 (Annex 7), using as legal basis Section 7 (e), Rule X of the Omnibus Civil Service Law and Rules,Implementing Book V of Executive Order No. 292, providing for the cash bonus of not less than One Hundred Pesos(P100.00) per year of service, chargeable against Agency's savings. It seems that the foregoing provision allows for aminimum but not for a maximum amount to be given, thereby giving the agencies enough flexibility to fix their own

maximum amounts depending on the agency's savings.

It is worthy to note in this connection that when the Civil Service Commission issued Memorandum Circular No. 42,series 1992, amending Section 7 (e), Rule X of the Omnibus Civil Service Law and Rules, providing that the amount ofcash bonus to be given should not be more than P100.00 per year of service, the GSIS returned to the old computationas authorized under Board Resolutions No. 192 and 187 dated May 16, 1989 and May 29, 1992 respectively (Annexes8 and 9). Hence, the matter was referred to the Civil Service Commission for clarification. The Commission ruled in aletter dated May 12, 1993 (Annex 10) addressed to PGM Cesar N. Sarino, that the availment of the award can bemade only under either system, whichever is more advantageous to the employees.

Petitioner GSIS did not squarely address the above finding of respondent COA or the Corporate Auditor. Instead, it based itsarguments on the general assumption that all the benefits and allowances subject of this petition were disallowed on the basis ofSection 12, R.A. No. 6758 and its implementing rules. This is beside the point, however, as it can readily be seen that

respondent COA's ruling on the loyalty and service cash award is actually based on a purported CSC declaration relative thereto.As a result, there has been no real joinder of issues as far as these benefits are concerned.

Coming now to G.R. No. 141625, the Court of Appeals did not commit any reversible error when it held that the petition filedbefore the GSIS Board questioning the legality of the deductions could proceed independently from the appeal brought bypetitioner GSIS from the COA disallowances. No error could be attributed to the appellate court's finding that there was noidentity of subject matter or issue between the COA proceedings and the retirees' claim before the GSIS Board.

However, considering that it has already been resolved in G.R. No. 138381, we no longer find it necessary to discuss whetherGSIS can deduct the COA disallowances from the respondents/retirees' retirement benefits. Having settled G. R. No. 138381, itis now incumbent

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