10/7/2019 COA DECISION NO.

2019-416

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DECISION NO. 2019-416
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DECISION NO. 2019-416

September 23, 2019

Subject: Petitions for Money Claim of the

employees of the National Power
Corporation (NPC terminated/separated
pursuant to National Power Board
Resolution Nos. 2002-124 and 2002-125
both dated November 18, 2002, against
NPC and Power Sector Assets and
Liabilities Management Corporation, for
the payment of the judgment award for
backwages, salary differentials, wage
adjustments, separation pay, and interest
based on the decision of the Supreme
Court in NPC Drivers and Mechanics
Association, et al. vs. NPC, et al.

DECISION

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FACTS OF THE CASE

1
Before this Commission are the Petitions for Money Claim of the employees
of the National Power Corporation (NPC) terminated/separated pursuant to National
Power Board (NPB) Resolution Nos. 2002-124 and 2002-125 both dated November
18, 2002, against NPC and Power Sector Assets and Liabilities Management
Corporation (PSALM), for the payment of the judgment award for backwages, salary
differentials, wage adjustments, separation pay, and interest based on the decision of
the Supreme Court (SC) in NPC Drivers and Mechanics Association (DAMA), et al.
2
vs. NPC, et al .

Considering that the petitions involve the same claims against the same agency,
this Commission consolidated the same for a more uniform application of the rules.

On June 26, 2001, Republic Act (RA) No. 9136, otherwise known as the
Electric Power Industry Reform Act (EPIRA), was enacted to provide reforms in the
electric power industry, which includes the privatization of the assets and liabilities of
3
the NPC. Pursuant to this objective, EPIRA created the NPB consisting of seven
Cabinet Secretaries, to wit: (a) Secretary of Finance, (b) Secretary of Energy, (c)
Secretary of Budget and Management, (d) Secretary of Agriculture, (e) Secretary of
Environment and Natural Resources, (f) Secretary of Interior and Local Government,
and (g) Secretary of Trade and Industry, and two heads of agencies, to wit: the
Director-General of the National Economic and Development Authority and the
President of the NPC.

On November 18, 2002, in line with the privatization of NPC and pursuant to
4
Section 63 of the EPIRA, NPB issued NPB Resolution No. 2002-124 which provides
for the Guidelines on the Separation Program of NPC and the Selection and
Placement of Personnel in the NPC Table of Organization. Under said resolution, all
NPC personnel shall be terminated on January 31, 2003 and shall be entitled to
separation benefits. On same date, NPB issued NPB Resolution No. 2002-125
constituting a transition team tasked to manage and implement NPC’s separation
program.

The members of NPC DAMA, NPC Employees and Workers Union (NEWU)-
Northern Luzon Regional Center, and all other concerned NPC employees filed a
5
Petition for Injunction before the SC to enjoin the implementation of NPB
Resolution Nos. 2002-124 and 2002-125. They contended that the resolutions were
not passed by a majority of the NPB members since only three out of the nine
members were present and qualified to vote during the meeting held for the purpose.

The SC did not issue a temporary restraining order, thus, NPC proceeded with
the termination beginning January 31, 2003.

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Later, in Decision dated September 26, 2006, the SC nullified NPB Resolution
Nos. 2002-124 and 2002-125. The SC held that the resolutions were not properly
enacted considering the failure of the four specifically identified Cabinet Secretaries
to personally approve and sign the resolutions. The SC ruled that:

In enumerating under Section 48 those who shall compose the

National Power Board of Directors, the legislature has vested upon
these persons the power to exercise their judgment and discretion in
running the affairs of the NPC. xxx Thus, the department secretaries
cannot delegate their duties as members of the NPB, much less their
power to vote and approve board resolutions, because it is their
personal judgment that must be exercised in the fulfillment of such
responsibility.

xxx

In the case at bar, it is not difficult to comprehend that in approving

NPB Resolutions No. 2002-124 and No. 2002-125, it is the
representatives of the secretaries of the different executive
departments and not the secretaries themselves who exercised
judgment in passing the assailed Resolution, as shown by the fact that
it is the signatures of the respective representatives that are affixed to
the questioned Resolutions. This, to our mind, violates the duty
imposed upon the specifically enumerated department heads to
employ their own sound discretion in exercising the corporate powers
of the NPC. Evidently, the votes cast by these mere representatives in
favor of the adoption of the said Resolutions must not be considered
in determining whether or not the necessary number of votes was
garnered in order that the assailed Resolutions may be validly
enacted. xxx.

However, said decision was silent as regards the effect of the nullity of the NPB
resolutions to the terminated/separated NPC employees,

Thus, in Resolution dated September 17, 2008, the SC clarified that the logical
and necessary consequence of the declaration of nullity of NPB Resolution Nos.
2002-124 and 2002-125 is the illegality dismissal of the employees on January 31,
2003. Accordingly, the terminated/separated NPC employees have the right to
reinstatement or separation pay in lieu of reinstatement, pursuant to a validly-
approved separation program, backwages, wage adjustments, and all other benefits
accruing from January 31, 2003 until actual reinstatement or payment of separation
pay, less the amount of separation benefits previously received under the nullified
resolutions. Moreover, the SC approved a 10% charging lien in favor of the counsels,

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Attys. Cornelio P. Aldon and Victoriano V. Orocio, in accordance with the Labor
Code.

On October 10, 2008, the SC Decision dated September 26, 2006 became final
and executory, and an Entry of Judgment thereof was made on October 27, 2008.

In Resolution dated December 10, 2008, the SC granted the motion for
execution, and directed the Chairman and Members of the NPB and the President of
NPC to prepare a verified list of the names of all NPC employees
terminated/separated as a result of the implementation of NPB Resolution Nos. 2002-
124 and 2002-125, and pay or cause to be paid immediately the amounts due to
affected NPC employees including 12% legal interest. Likewise, the SC directed the
Office of the Clerk of Court and ex-officio Sheriff of the Regional Trial Court (RTC)
of Quezon City (QC) to issue a Writ of Execution based on the list submitted by NPC
and undertake all necessary actions to execute the decision and resolution.

Citing willful failure of the NPB and NPC to comply with the Resolution dated
December 10, 2008, the terminated/separated NPC employees, in a Manifestation
with Urgent Omnibus Motions dated February 9, 2009, moved for the garnishment
and/or levy of NPC assets, including but not limited to the assets of PSALM, for the
satisfaction of the judgment.

This prompted PSALM to file before the SC a Manifestation on February 25,

2009 to stress that it is not bound by the judgment rendered since it is not a party in
the case. Moreover, PSALM pointed out that the EPIRA does not allow garnishment
and levy of its assets to satisfy the judgment against NPC since it is not one of those
liabilities transferred to and assumed by it at the effectivity of the EPIRA.

Meanwhile, in its Compliance dated March 9, 2009, NPC manifested that there
were only 16 NPC personnel, consisting of top level employees occupying the
positions of Senior Vice President, Vice President, and Department Manager
terminated on January 31, 2003, contrary to the manifestation of the
terminated/separated NPC employees. Moreover, since it was not barred from
approving another separation program for its employees, on September 14, 2007, NPB
issued Resolution No. 2007-55 adopting, confirming, and approving the principles
and guidelines enunciated in the nullified Resolution Nos. 2002-124 and 2002-125.
NPC claimed that NPB Resolution No. 2007-55 cured the infirm NPB Resolution
Nos. 2002-124 and 2002-125.

However, in Resolution dated December 2, 2009, the SC ruled that its Decision
dated September 26, 2006 contemplated the illegal dismissal of all, not only of 16
NPC employees, pursuant to NPB Resolution Nos. 2002-124 and 2002-125.
Moreover, the SC found that NPB subsequently issued Resolution No. 2003-11 dated
January 22, 2003 showing the effectivity of termination of personnel on February 28,

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2003 since it was no longer tenable for NPC to complete the separation of employees
on January 31, 2003. The SC held that:

Under NPB Resolution No. 2002-124, the services of all NPC

personnel/employees were deemed legally terminated as of 31
January 2003. However, because it was no longer tenable for NPC to
complete the legal separation of NPC employees on 31 January 2003,
NPB Resolution No. 2003-11 dated 22 January 2003 was issued
showing the effectivity of termination of personnel on 28 February
2003. NPC intentionally did not inform the Court that the separation
of other employees holding the positions of below Vice-President
levels, supervisors and rank-and-file was 28 February 2003 pursuant
to NPB Resolution No. 2003-11 dated 22 January 2003.

Additionally, NPC subsequently issued Circular No. 2003-09, showing that the legal
termination of its employees was implemented in four tranches, namely:

1) Top Executives-effective January 31, 2003;

2) Early leavers (those who did not intend to be rehired by NPC

based on the new organizational structure or those who were no
longer employed by NPC after the effectivity of the EPIRA on
6
June 26, 2001, for any reason other than voluntary resignation) -
effective January 15, 2003;

3) Those no longer employed in NPC after June 26, 2001-effective

on the date of actual separation; and

4) All other personnel-effective February 28, 2003.

In light of these issuances, the SC ruled that the right to reinstatement, or separation
pay in lieu of reinstatement pursuant to a validly approved separation program, plus
backwages, wage adjustments, and other benefits shall be computed from, instead of
January 31, 2003, the date of legal termination as stated in NPC Circular No. 2003-09,
to wit:

1) The legal termination of key officials shall be at the close of office

hours of January 31, 2003;

2) The legal termination of personnel who availed of the early

leavers’ scheme shall be on the last day of service in NPC but not
beyond January 15, 2003;

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3) The legal termination of personnel who were no longer employed

in NPC after June 26, 2001 shall be the date of actual separation
in NPC; and

4) For all other NPC personnel, their legal termination shall be at the
close of office hours/shift schedule of February 28, 2003.

less the amount of separation benefits which they previously received under the null
resolutions.
The SC further ruled that NPC Resolution No. 2007-55 did not cure the defects
of the null resolutions, and that the same should be applied prospectively. Thereunder,
the services of all NPC employees have been legally terminated on September 14,
2007. Thus, the terminated/separated NPC employees’ entitlement shall be reckoned
from the dates indicated in NPC Circular No. 2003-09 up to September 14, 2007.

Lastly, the SC ordered that PSALM be impleaded as a party-respondent in the

case being the agency that assumed all of NPC’s existing generation assets, liabilities,
7
IPP contracts, real estate, and other disposable assets under Section 49 of the EPIRA
and reiterated the order for NPC to prepare a list of terminated employees.

On December 23, 2009, in compliance with the Resolution dated December 2,

2009, the RTC of QC demanded that NPC pay the terminated/separated NPC
employees, including the 10% charging lien, and lawful fees and costs for the
execution of said resolution. On same date, the RTC of QC issued Notices of
Garnishment to Manila Electric Company (MERALCO), Land Bank of the
Philippines (LBP), and Philippine National Bank. However, upon motion of NPC on
January 5, 2010, the SC, in Resolution dated January 13, 2010, deferred the execution
of the Resolution dated December 23, 2009, and, among others, directed that both
parties maintain status quo such that no NPC assets/deposits shall be garnished upon
further orders from the SC.

Thereafter, in Resolution dated June 30, 2014, the SC lifted the status quo
order. Thus, pursuant to said resolution, the Clerk of Court and the ex-officio Sheriff
of the RTC of QC issued a Demand for Immediate Payment amounting to
P62,051,646,567.13 and served the same upon NPC and PSALM. On July 31, 2014,
Notices of Garnishment were issued addressed to MERALCO and National
Transmission Commission (Transco) with respect to all credits in or under their
possession or control owing or payable to NPC and/or PSALM, including but not
limited to bank deposits and financial interests, goods, effects, stocks, interest in stock
and shares, and other personal properties. Another Notice of Garnishment was issued
and served upon LBP in relation to NPC and PSALM’s bank accounts. However,
PSALM, in separate letters, advised MERALCO and Transco to exercise restraint and
refrain from releasing funds owing to PSALM to satisfy the Notices of Garnishment
served upon them.

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Taking into consideration that there is yet to be submitted a list of the

terminated/separated NPC employees, and PSLAM’s opposition to the execution of
the judgment award against it, the SC ordered anew the deferment of the execution of
the judgment award. Thus, in Resolutions dated September 9, 2014 and October 20,
2014, the SC directed the parties to submit their separate list of NPC employees as of
January 31, 2003, and directed the Clerk of Court and the ex-officio Sheriff of the
RTC of QC to defer the implementation of the Decision dated September 26, 2006
and the Resolutions dated September 17, 2008, December 2, 2009, and June 30, 2014,
and lift the Notice of Garnishment.

In compliance to the Resolution dated October 20, 2014, NPC submitted a list
of 9,272 employees on March 16, 2015 with reservations on the figures, and PSALM
submitted a list of 47 employees based partially on the information received from
NPC.

Thereafter, NPC and PSALM filed their separate manifestations and motions.
For its part, PSALM argued, among others, that it is liable only for
obligations/liabilities that were exclusively listed under the EPIRA, which does not
include the separation benefits of the terminated/separated NPC employees.
Moreover, prior approval of this Commission must be obtained before any money
judgment can be enforced against it. On the other hand, NPC maintained, among
others, that in the absence of an actual computation of the amounts due the
terminated/separated NPC employees, the Clerk of Court and ex-officio Sheriff of the
RTC of QC cannot garnish NPC properties.

In Resolution dated November 21, 2017, the SC finally addressed all new
issues raised by the parties in their respective motions and manifestations.

In said resolution, the SC affirmed Resolution dated June 30, 2014, holding
that PSALM is directly liable for the judgment obligation. While the general rule is
that NPC, as the employer guilty of illegal dismissal, shall be liable for the
terminated/separated employees’ entitlement, PSALM assumed this obligation.
PSALM’s assumption is clear based on the following reasons:

1) The liability already existed at the time of the EPIRA’s effectivity

and was transferred from NPC to PSALM by virtue of Section 49
8
of the law. Since the EPIRA mandated NPC’s privatization and
subsequent restructuring, the law, when it took effect on June 26,
2001, had already contemplated the termination of all NPC
employees as a logical effect of its mandate. Thus, the liability to
pay the entitlement arising from the employee’s separation is
deemed to have existed upon the EPIRA’s effectivity.

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2) PSALM expressly undertook all NPC transferred obligations

under Section 3.01 of the Deed of Transfer, which includes the
liability to pay the terminated/separated NPC employees’
entitlement. In the Deed of Transfer, PSALM agreed to assume all
other liabilities and obligations of the NPC mandated by the
EPIRA to be transferred to PSALM and those which have been
validated, fixed, and finally determined to be legally binding on
NPC by proper authorities. The liability was finally determined by
the SC on October 10, 2008, the date of finality of the Decision
dated September 26, 2006, before December 31, 2008, the actual
transfer date recognized by the parties.

9
3) At any rate, Sections 49 and 50 of the EPIRA are clear that
PSALM is duty-bound to settle this NPC liability.

While PSALM is directly liable for the payment of the terminated/separated

NPC employees’ entitlement, the SC held that the terminated/separated NPC
employees should comply with the proper procedure to enforce a judgment award
against the government. Thus, the SC directed them to file their claim against
NPC/PSLAM before this Commission:

We have consistently ruled that the back payment of any

compensation to public officers and employees cannot be done
through a writ of execution . The COA has exclusive jurisdiction
to settle ‘all debts and claims of any sort due from or owing to
the Government or any of its subdivisions, agencies, and
instrumentalities.’ The proper procedure to enforce a judgment
award against the government is to file a separate action before
the COA for its satisfaction. (Underscoring supplied)

Lastly, the SC proposed guidelines intended to aid this Commission in

determining, re-computing, and validating the amount due the terminated/separated
NPC employees, to wit:

1) Separation pay in lieu of reinstatement plus back wages plus other

wage adjustments minus separation pay already received under
the plan;

2) The attorney's charging lien shall be 10% of the entitlement, after

deducting the separation pay already received under the
restructuring plan; and

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3) Illegally dismissed NPC employees are entitled to interest at the

legal rate. The payment of legal interest is a natural consequence
of a final judgment. Interest on the judgment award shall be
computed as follows:

a) 12% per annum from October 8, 2008,until June 30, 2013;

and

b) 6% per annum from July 1, 2013 onwards.

Hence, the Petitions for Money Claim filed by the terminated/separated NPC
employees.

In these petitions, the terminated/separated NPC employees prayed that NPC

and PSALM be directed to:

1) Pay them their separation pay, less deductions for the Government
Service Insurance System (GSIS), Bureau of Internal Revenue
(BIR), and the Home Development Mutual Fund (HDMF), having
a net amount of P 73,183,400.34 , representing their backwages,
wage adjustments, other benefits, and separation pay, from March
1, 2003 to September 14, 2007, accrued interest at 12% per
annum from October 10, 2008 to June 30, 2013, and 6% per
annum from July 1, 2013 up to the date NPC and PSALM
complies with the SC’s order;

2) Pay the 10% charging lien to Atty. Aldon and Atty. Orocio;

3) Make the necessary corrections and update of the computation of

the interest on the money claims up to the time of actual payment
by NPC and PSALM of said amounts and remit the statutory
deductions being deducted from the claim to the respective
agencies of the government as GSIS, BIR, and HDMF; and

4) Issue a corrected Service Record for separated and unrehired NPC

employees reflecting therein the continuity of services from
March 1, 2003 to September 14, 2007, indicating their
10
assignments re: SC Decision in NPC DAMA case and Betoy vs.
11
The Board of Directors, NPC ;

On the other hand, the separated employees who were subsequently absorbed
in NPC, PSALM, Transco, or employed in another government agency alleged that
while they were rehired and employed under new or different positions, such were

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with lower salary rates and with less allowances and benefits. Thus, they prayed that
NPC and PSALM be directed to:

1) Pay them their differentials comprising of wages/salary

differentials, allowances, and other benefits; and

2) Pay the 10% charging lien to Atty. Aldon and Atty. Orocio.

Mr. Zol D. Medina additionally alleged that he is acting on behalf of all the
class suit petitioners in the NPC-DAMA case and as the authorized representative, he
shall effect distribution and make individual payments to each and every member of
the class suit as per computation by NPC/PSALM and approved by this Commission.

In its Comment, the Power Generation Employees Association averred that Mr.
Medina may not be authorized to effect the distribution which would require the
opening of a bank account and preparation of documents. Moreover, there might be a
need for the institution of estate proceedings for deceased employees which would be
a safety concern of Mr. Medina and his family.

In its Answer, the NPC, represented by the Office of the Solicitor General
(OSG), prayed that the petitions be resolved in accordance with the instructions of the
SC in NPC-DAMA case and pursuant to the laws, issuances, and policies applicable
during the reckoning period.

On the other hand, PSALM, through the Office of the Government Corporate
Counsel, in its Answer, posed the following:

1) The petitions do not comply with paragraph b, Section 2, Rule

VIII, of the 2009 Revised Rules of Procedure of the Commission
on Audit (COA), which specifically requires that its attachment
and supporting documents must be certified true copies;

2) The money claims are unfounded and should be denied as they are
unsupported by the proper documentation, contrary to both law
and jurisprudence;

3) The petitions are not verified since petitioners failed to present

valid identification which renders the notarization invalid;

4) COA is the proper authority to determine the exact amount of the

judgment award;

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5) Petitioners’ computations of the amounts to which they are

entitled to are self-serving, irrelevant, and should not be the basis
for the judgment award;

6) The general guidelines specified in the Resolution dated

November 21, 2017 should be observed and complied with; and

7) The validation of the veracity of the allegations on the petitioners’

NPC employment cannot be determined since PSALM was not
privy to the employment contract between NPC and petitioners,
and it does not have the legal custody of petitioner’s NPC
employment information and records.

The Supervising Auditor (SA) made the following comments on the money
claims:

1) Petitioners were former employees of NPC;

2) Some were not rehired while others were rehired and employed
with the government after their separation from NPC;

3) The petitions were submitted with documents which substantially

supported the claims of the petitioners;

4) The unrehired petitioners are qualified to receive separation pay

for the gap or full period from March 1, 2003 up to September 14,
2007, the period for which the petitioners are entitled to the
payment of separation pay plus full back wages;

5) The claims of petitioner who are without any gaps in service shall
be denied; and

6) Mr. Medina does not have any evidence showing that he was
authorized by the other petitioners and potential claimants to
represent them and file the claim on their behalf.

In view of the foregoing, the SA recommended that the claims be given due
course.

The Cluster Director (CD), Cluster 3, Corporate Government Sector, this

Commission, concurred with the view of the SA and recommended that the money

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claims be given due course in the amounts determined by the SA. As for the rehired
claimants, the CD submitted that the SC decision was silent as to the payment of
salary differentials, thus, this Commission cannot rule on this issue. Anent Mr.
Medina, the CD agreed that he failed to present proof that he was authorized to
represent and file the claim on behalf of the petitioners.

12
In an Urgent Manifestation and Motion to Resolve dated March 1, 2019 and
13
in an Addendum of Documents dated April 17, 2019, Atty. Napoleon U. Galit,
counsel for other claimants, alleged that this case is a class suit for which one
consolidated decision involving the 9,272 employees shall apply, and prayed that an
award of agency charge and attorney’s fees be incorporated in the decision pursuant to
a resolution signed between him and NPC DAMA.

ISSUE

The issue to be resolved is whether or not the Petitions for Money Claim are
meritorious.

DISCUSSION

This Commission finds the petitions partly meritorious.

The execution of the monetary judgment against NPC/PSALM is within the

primary jurisdiction of this Commission, pursuant to Section 26 of Presidential Decree
(PD) No. 1445, which substantially provides that the authority and powers of this
Commission shall extend to the settlement of all debts and claims of any sort due from
or owing to the Government or any of its subdivisions, agencies, and
instrumentalities.

Thus, despite the finality of the decision of the SC in the NPC DAMA case, its
execution is subject to the primary jurisdiction of this Commission. In University of
14
the Philippines vs. Agustin Dizon , the SC ruled that:

It was of no moment that a final and executory decision already

validated the claim against the UP. The settlement of the monetary
claim was still subject to the primary jurisdiction of the COA

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despite the final decision of the RTC having already validated the
claim . As such, Stern Builders and dela Cruz as the claimants had
no alternative except to first seek the approval of the COA of their
monetary claim. (Emphasis supplied)

However, there are limits to what this Commission may review when
confronted with a money claim based on a final and executory judgment. This
Commission is bound to respect the final character of such judgment, the merits of the
claim having been assessed and adjudged by the courts. Prudence requires this
Commission to accept the judicial determination of the claim on the merits against the
government instrumentally adjudged as liable, since, as a general rule, a final
judgment may no longer be altered, amended, or modified and any attempt on the part
of the responsible entities charged with the execution of the final judgment to insert,
change, or add matters not clearly contemplated in the dispositive portion violates the
15
rule on immutability of judgments.

Nevertheless, this Commission remains mandated to confirm the veracity of the

final judgment on which the money claim is based, before authorizing the
disbursement of money to fund the claim. In doing so, this Commission has to be
satisfied as to the authenticated existence of the final and executory decision, the
precise award to be enforced based on the clear terms of the judicial decision, and the
governmental character of the natural or juridical persons against whom the claim is
16
sought to be enforced.

This Commission finds that the issue on whether petitioners are entitled to
monetary awards arising from an illegal dismissal case has been judiciously passed
17
upon by the SC in its decision in the NPC DAMA case. As such, the following
matters are determined to be final:

1) NPB Resolution Nos. 2002-124 and 2002-125 are void and

without effect as they were not passed by a majority of the NPB
members;

2) The termination from service of all the NPC employees affected

under the NPB resolutions was illegal;

3) The illegally-dismissed employees who were not subsequently

hired are entitled to separation pay in lieu of reinstatement,
backwages, and other wage adjustments, after deduction of the
separation pay they have already received;

4) The illegally-dismissed employees who were rehired are not

entitled to separation pay, backwages, and other wage

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adjustments;

5) The issuance of NPB Resolution No. 2007-55 on September 14,

2007 only means that the services of all NPC employees have
been legally terminated on this date; and

6) Petitioners’ counsels are entitled to a 10% charging lien.

Additionally, this Commission confirms the governmental character of PSALM,

a government-owned and controlled corporation, expressly created by the EPIRA to
take ownership of all existing NPC generation assets, liabilities, IPP contracts, real
estate, and all other disposable assets. As the transferee of existing obligations of NPC,
PSALM is duty-bound to settle the liability of NPC arising from the illegal dismissal
of its employees pursuant to NPB Resolution Nos. 2002-124 and 2002-125.

This Commission shall now proceed to determine the computation of the claims
of the petitioners based on the guidelines provided in Resolution dated November 21,
2017.

As decreed by the SC, the terminated/separated NPC employees’ entitlement

consists of the following: (a) separation pay in lieu of reinstatement; (b) backwages;
and (c) wage adjustments, less any separation pay already received under the
restructuring plan.

A. Separation pay

The separation pay in lieu of reinstatement due to each petitioner shall be either
the:

1) Separation pay under the EPIRA and the NPC restructuring plan

A person is qualified to receive separation benefits under the

NPC’s restructuring plan if all the following requirements concur:

a) He/she is an official or employee whose employment was

severed pursuant to the privatization of the NPC;

b) He/she has rendered at least one year of service as of June 26,

2001;

c) He/she must have not qualified or opted to retire under existing

laws;

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d) If a casual or contractual employee, he/she must have had

his/her appointment approved or attested to by the Civil
Service Commission.

If qualified, he/she shall receive separation pay under the NPC

restructuring plan, which is equal to one and one-half months’
salary for every year of service in the government.

The formula to compute the amount of separation pay has three

components, namely:

a) Base amount, consisting of monthly salary;

b) Multiplier of one and one-half months or 1.5; and

c) Length of service.

Salary, for purposes of the Implementing Rules and Regulations

of the EPIRA, is defined as the basic pay, including the 13 th
month pay received by an employee pursuant to his appointment
but excluding per diems , bonuses, overtime pay, honoraria,
allowances, and any other emoluments received in addition to the
basic pay under existing laws. In other words, the base amount
must consist of basic pay or salary and 13 th month pay
exclusively.
As regards length of service, each employee’s years of service
shall be counted from their first year of employment until
September 14, 2007. However, if they would have reached the
compulsory retirement age of 65 years before September 14,
2007, then the period of service should be counted only up to the
date of retirement.

18
2) Separation gratuity under RA No. 6656, depending on their
qualification.

If the person does not meet all the above-mentioned requirements

but was separated pursuant to the restructuring, he/she is not
qualified to receive the separation pay under the NPC’s
restructuring plan, but is nonetheless entitled to a separation
gratuity provided in RA No. 6656 in the amount equivalent to one
month basic salary for every year of service.

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As regards length of service, each employee’s years of service

shall be counted from their first year of employment until
September 14, 2007. However, if they would have reached the
compulsory retirement age of 65 years before September 14,
2007, then the period of service should be counted only up to the
date of retirement.

B. Backwages, wage adjustments, and other benefits

Petitioners who were neither rehired by the NPC or absorbed by PSALM or

TransCo pursuant to the 2003 reorganization and subsequently employed in private
sector shall be entitled to full backwages.

NPB Resolution Nos. 2002-124 and 2002-125 directed the termination from
service of all NPC employees effective January 31, 2003. However, the NPC
subsequently issued NPC Circular No. 2003-09 setting forth four different dates of
effectivity, namely:

Group Effective date of termination

Top executives January 31, 2003
Early-leavers January 15, 2003
Those no longer employed after June 26, 2001 Date of actual separation
All other NPC personnel February 28, 2003

Thus, backwages shall be counted from each group’s respective effective date
of termination, as the case may be, until September 14, 2007 or the petitioners’ date of
retirement, in case petitioner retired after the effective date of termination but before
September 14, 2007.

The backwages shall be computed based on the most recent salary rate upon
termination. The backwages should include other monetary benefits attached to the
employee’s salary. Backwages shall include other monetary benefits attached to the
employee’s salary following the principle that an illegally dismissed government
employee who is later reinstated is entitled to all the rights and privilege that accrue to
19
him/her by virtue of the office he/she held.

As regards employees who were subsequently rehired by the NPC, absorbed by

PSALM or Transco, or transferred or employed by other government agencies, the SC
did not provide for their backwages. To quote from the Resolution dated November
21, 2017:

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Thus, We rule that petitioners who were subsequently: (a) rehired

by the NPC, (b) absorbed by PSALM or Transco, or (c)
transferred or employed by other government agencies, are not
entitled to backwages . (Emphasis and underscoring supplied)

The SC held that the award of backwages to rehired employees amounts to unjust
enrichment and damage to the government. The SC reasoned that:

[T]he Court nullified NPB Resolution Nos. 2002-124 and 2002-125,

and consequently held that the herein petitioners were illegally
dismissed. However, in the meantime, NPC proceeded to implement
these resolutions. As a result, some of the petitioners were re-
employed by NPC or hired by PSALM or Transco. In other words,
while they may have been illegally dismissed, it cannot be denied
that the rehired or absorbed NPC personnel nonetheless benefitted
from the now-defunct NPB resolutions when they continued to be
employed in the government and receive compensation for their
service.

To allow them: (a) to enjoy, without reimbursement, the employee

benefits they earned as rehired or absorbed NPC employees after
termination from NPC until September 14, 2007 or the date of
retirement, whichever is earlier and simultaneously, and (b) to
benefit from the award of full back wages covering the same period
is tantamount to permitting these personnel to occupy multiple
positions in the civil service (i.e., their original position in the NPC
and their new position in the NPC, PSALM, or Transco after the
reorganization) and to receive benefits separately for each of those
positions.

While it would not seem equitable for such employees to receive less than
other employees who were unrehired or employed elsewhere, nevertheless, they are
likewise not entitled to receive salary differentials, since, as the SC ruled, they cannot
benefit from the nullified NPB Resolution Nos. 2002-124 and 2002-125 and at the
same time be allowed to benefit from the award of full backwages, wage adjustments,
and other benefits. Thus, this Commission shall refrain from ruling on the rehired
employees’ claim for salary differential.

C. Separation pay already received under the restructuring plan

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From the separation pay, backwages, and other wage adjustments, the amount
of each employee shall receive must be reduced by any separation pay each of them
has already received under the separation plan.

Anent the 10% charging lien, this Commission rules that the charging lien of
Attys. Aldon and Orocio shall be 10% of the petitioners’ entitlement, after deducting
the separation pay already received under the restructuring plan. As a charging lien,
the attorney’s fees shall be taken from each employee’s entitlement. However, any
legal interest due on the petitioners’ entitlement shall not be subject to the 10%
charging lien.

Anent the imposition of legal interest, this Commission, in COA Decision No.
20 21
2017-110 dated April 26, 2017, already clarified that pursuant to Sections 85(1)
22
and 86 of PD No. 1445 legal interest cannot be awarded in the absence of funds
duly appropriated for such purpose. In said decision, this Commission cited the case
23
of Collector of Internal Revenue vs. St. Paul’s Hospital of Iloilo , thus:

We agree, however, with the Solicitor General that the Court of Tax
Appeals erred in ordering the payment of interest on the amount to be
refunded to respondent herein. In the absence of a statutory provision
clearly or expressly directing or authorizing such payment, and none
has been cited by the respondent . The National Government cannot
be required to pay interest . So much the decision appealed from as
requires the payment of interest should, therefore, be eliminated.
(Underscoring supplied)

However, this Commission cannot discount the intricacies and complications

resulting from the nullification of NPB Resolution Nos. 2002-124 and 2002-125.

It may be recalled that the NPC DAMA case is a Petition for Injunction seeking
to enjoin the implementation of the allegedly void NPB Resolution Nos. 2002-124
and 2002-15. At the onset, the SC Decision dated September 26, 2006 was silent as to
the effect of the nullity of the resolutions on the terminated/separated NPC employees.
Thus, in its Resolution dated September 17, 2007, the SC clarified that the
terminated/separated NPC employees are, as a consequence, illegally dismissed, and
thus, entitled to reinstatement or separation pay in lieu of reinstatement, backwages,
wage adjustments, and other benefits. As a result of this clarification, NPC was
directed to submit a list of all employees terminated/separated as a result of the
implementation of the nullified resolutions. Problems started to escalate when the
terminated/separated NPC employees sought for the immediate execution of the
judgment award, without the necessary compliance from NPC and disregarding the
rules on the execution of final and executory judgments against the government. This
led to the garnishment of the assets and the impleading of PSALM in the case. Note
that PSALM is not a party in the original Petition for Injunction. The execution of the

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judgment award dragged for years in view of the continuous failure of NPC to comply
with the court orders, which eventually led to the SC citing it and the OSG for indirect
contempt, and the novel issues raised by PSALM, notwithstanding the finality of the
decision on October 10, 2008. Still, the execution of the judgment award was deferred
in view of the other issues raised by the affected and interested parties not considered
in the previous resolutions. It was only in Resolution dated November 21, 2017 when
the SC finally resolved all issues raised and left to this Commission the computation
of the claims of the terminated/separated NPC employees.

With that in mind, the illegally-dismissed NPC employees cannot be denied of

their rightful claim for legal interest against NPC and/or PSALM due to the discussed
lapses of the government. Thus, in view of the peculiarity of the circumstances of this
case and despite our previous rulings denying claims for payment of interest, this
Commission shall pro hac vice adhere to the Resolution dated November 21, 2017
granting the payment of legal interest.

Legal interest shall accrue on the petitioners’ entitlement, i.e., separation pay,
backwages, and wage adjustments, after deducting the separation pay they already
received under the restructuring plan and the 10% charging lien. Following these
principles, the interest shall be computed as follows:

1) 12% per annum from October 10, 2008, until June 30, 2013; and

2) 6% per annum from July 1, 2013 onwards.

As held by the SC, no interest shall be due on the attorney’s fees.

The running of the interest shall end once NPC and/or PSALM have offered to
pay the amount owed to each employee. For this purpose, NPC and/or PSALM may
provide for the cut-off on the day before payments due the employees are ready to be
made and the employees have been duly informed thereof.

Anent the manifestations submitted by Mr. Medina on filing the claim on

behalf of the 9,272 terminated/separated NPC employees, and by Atty. Galit on the
class suit contention, this Commission maintains that the personal circumstances of
each dismissed employee negates the existence of a class suit. However, considering
the number of people involved, this decision shall extend to all the illegally
terminated/separated NPC employees covered in the NPC List and Computation.

Lastly, anent the manifestation of Atty. Galit on the award of agency fee and
attorney’s fees, the following documents were submitted in support thereof:

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1) A Consultancy Agreement between the NPC DAMA, NEWU, and

Atty. Napoleon U. Galit, Atty. Raoul Victorino, Atty. Narciso Nario,
and Atty. Tereso L. Javier, dated February 12, 2012;

2) Resolution No. 2012-001 of the Board of Directors of DAMA dated

January 24, 2012, allocating part of the agency fee for the payment of
expenses and services of legal consultants;

3) A Memorandum of Agreement between NPC DAMA, NEWU, and the

NPC Employees Consolidated Union (NECU) dated July 20, 2014,
agreeing to charge/impose a common agency fee or additional
assessment, or check off of Five Percent (5%) from the total payment
24
in the DAMA case due to each and every employee affected by the
reorganization of NPC in March 2003;

4) Resolution No. 2009-007 of the National Officers and Board of

Directors of NPC DAMA, giving NPC DAMA the authority to deduct
5% agency fee to all officials and members of NECU; and

5) Joint NECU-NEWU Resolution 2008-005 dated November 3, 2008,

giving full authority to the Presidents of NECU and NEWU to
represent and negotiate the claims in NPC DAMA, et al. vs. NPC, et
25
al.

The grant of the agency fee and attorney’s fees is not within the scope of
authority of this Commission. The right of the unions to the agency fee, and Attys.
Galit, Victorino, Nario, and Javier to attorney’s fees, as may have been established in
the documents submitted, is a matter between them and their clients, and may be
prosecuted in the manner provided under the Rules of Court.

RULING

WHEREFORE , premises considered, the Petitions for Money Claim of the

employees of the National Power Corporation (NPC) terminated/separated pursuant to
National Power Board Resolution Nos. 2002-124 and 2002-125 both dated November
18, 2002, against NPC and Power Sector Assets and Liabilities Management
Corporation (PSALM), are hereby PARTIALLY GRANTED , the computation of
the entitlement of each employee is as provided in this decision consistent with the
guidelines set forth by the Supreme Court in its Resolution dated November 21, 2017
in the case of NPC Drivers and Mechanics Association, et al. vs. NPC, et al ., subject

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to the availability of funds and the usual accounting and auditing rules and
regulations.

Accordingly, NPC and PSALM are ordered to immediately update the NPC
List and Computation in accordance with this decision and furnish the Supervising
Auditor (SA) a copy, and thereafter, schedule the payment to the entitled NPC
employees. NPC and PSALM are hereby directed to do the same with respect to the
attorney’s fees of Attys. Cornelio P. Aldon and Victoriano V. Orocio .

Furthermore, the SA is directed to validate the computation of the updated

NPC List and Computation, as well as the attorney’s fees of Attys. Aldon and Orocio.
The Assistant Commissioner, Corporate Government Sector (CGS), and the Director,
CGS-Cluster 3, both of this Commission, shall provide the SA with the necessary
support and additional personnel in order to complete the validation with utmost
dispatch.

(SGD.) MICHAEL G. AGUINALDO

Chairperson

(SGD.) JOSE A. FABIA (SGD.) ROLAND C. PONDOC

Commissioner Commissioner

Attested by:

(SGD.) NILDA B. PLARAS

Director IV
Commission Secretariat

Copy furnished:

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Mr. Timoteo I. Judaya

Bagakay, Tayud,
Consolacion, Cebu

Mr. Edgardo E. Nohay

Lot 10, Block 3, Villa Jem Subdivision
Sta. Rita, Batangas City

Mr. Carlito P. Galivo

3917 Capisnon, Kauswagan
Cagayan de Oro City 9000

Mr. Enrique U. Betoy

412 Aries St., Terry Hills Subdivision
Bulua, Cagayan de Oro City 9000

Ms. Ma. Socorro D. Marfa

Lot 13, Block 4, Phase 3-B
Balsam Loop, Greenwoods Executive Village
Cainta, Rizal 1900

Ms. Elizabeth D. Alorro

For Rodolfo A. Alorro
50 Cahoy St., Cahoy Compound
Kauswagan, Cagayan de Oro City 9000

The President
National Power Corporation
BIR Road cor. Quezon Avenue, Quezon City

The President
Power Sector Assets and Liabilities Management Corporation
BIR Road cor. Quezon Avenue, Quezon City

All of Office of the Government Corporate Counsel

3 rd Floor, MWSS Building, Katipunan Road
Balara, Quezon City 1119

The Directors
Cluster 3, Corporate Government Sector

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Information Technology Office, Systems and Technical Services Sector

Claims and Adjudication Office-Corporate, Commission Proper Adjudication and
Secretariat Support Services Sector (CPASSSS)

The Assistant Commissioners

Special Services Sector
Commission Proper Adjudication and
Secretariat Support Services Sector

All of this Commission

1 Pursuant to Section 1, Rule VIII, 2009 Revised Rules of Procedure of the Commission on Audit (COA).
2 G.R. No. 156208, September 26, 2006.
3 Section 48, Republic Act No. 9136.
4 Separation Benefits of Officials and Employees of Affected Agencies. -National government employees
displaced or separated from the service as a result of the restructuring of the electricity industry and
privatization of NPC assets pursuant to this Act, shall be entitled to a separation pay and other benefits in
accordance with existing laws, rules or regulations. Displaced or separated personnel as a result of the
privatization, if qualified, shall be given preference in the hiring of the manpower requirements of the privatized
companies.
All employees of NPC affected by the passage of this Act shall be entitled to avail of the privileges provided
under the NPC separation plan existing as of January 1, 2001.
The salaries of employees of NPC shall continue to be exempt from the coverage of Republic Act No. 6758,
otherwise known as "The Salary Standardization Act".
With respect to employees who are not retained by NPC, the government, through the Department of Labor and
Employment, shall endeavor to implement re-training, job counseling, and job placement programs.
5 Supra , note 2.
6 National Power Board Resolution No. 2002-124 dated November 18, 2002.
7 Creation of Power Sector Assets and Liabilities Management Corporation. -There is hereby created a
government owned and controlled corporation to be known as the "Power Sector Assets and Liabilities
Management Corporation", hereinafter referred to as the "PSALM Corp.", which shall take ownership of all
existing NPC generation assets, liabilities, IPP contracts, real estate and all other disposable assets. All
outstanding obligations of the National Power Corporation arising from loans, issuances of bonds, securities and
other instruments of indebtedness shall be transferred to and assumed by the PSALM Corp. within ninety (90)
days from the approval of this Act.
8 Ibid .
9 Purpose and Objective, Domicile and Term of Existence. -The principal purpose of the Corporation is to
manage the orderly sale, disposition, and privatization of NPC generation assets, real estate and other disposable
assets, and IPP contracts with the objective of liquidating all NPC financial obligations and stranded contract
costs in an optimal manner.
The Corporation shall have its principal office and place of business within Metro Manila.
The Corporation shall exist for a period of twenty five (25) years from the effectivity of this Act, unless
otherwise provided by law, and all assets held by it, all moneys and properties belonging to it, and all its

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liabilities outstanding upon the expiration of its term of existence shall revert to and be assumed by the National
Government.
10 Supra, note 2.
11 G.R. No. 156556-57, October 4, 2011.
12 CPCN No. 2018-285
13 Ibid .
14 G.R. No. 171182, August 23, 2012.
15 COA Decision No. 2012-123 dated August 10, 2012, with subject: Money Claim of Ethel Brunty and Mr.
Juan Manuel M. Garcia Against the Philippine National Railways, for Payment of Damages Based on the
Supreme Court Ruling in Philippine National Railways vs. Ethel Brunty and Juan Manuel M. Garcia , G.R. No.
169891, November 2, 2006.
16 Ibid .
17 Supra , note 2.
18 An Act to Protect the Security of Tenure of Civil Service Officers and Employees in the Implementation of
Government Reorganization.
19 Galang vs. Land Bank of the Philippines , G.R. No. 175276, May 31, 2011, citing Civil Service Commission
vs. Magnaye, Jr. , G.R. No. 183337, April 23, 2010.
20 Petition for Money Claim of Ms. Carmela C. Bautista, doing business under the name and style of Jeck
Construction, against the Municipal Government of Botolan, Zambales, for payment of work accomplished on
the construction of a covered court in San Miguel, Botolan, Zambales, amounting to P3,215,854.19, plus legal
interest and cost of suit.
21 No contract involving the expenditure of public funds shall be entered into unless there is an appropriation
therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed
expenditure.
22 Certificate showing appropriation to meet contract. Except in the case of a contract for personal service, for
supplies for current consumption or to be carried in stock not exceeding the estimated consumption for three
months, or banking transactions of government-owned or controlled banks, no contract involving the
expenditure of public funds by any government agency shall be entered into or authorized unless the proper
accounting official of the agency concerned shall have certified to the officer entering into the obligation that
funds have been duly appropriated for the purpose and that the amount necessary to cover the proposed contract
for the current fiscal year is available for expenditure on account thereof, subject to verification by the auditor
concerned. x x x.
23 G.R. No. L-12127, May 25, 1959.
24 Supra , note 2.
25 Ibid.

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