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12/6/2017 G.R.No.

162224


ENBANC


2nd LT. SALVADOR PARREO G.R.No.162224
represented by his daughter
MyrnaP.Caintic, Present:
Petitioner,
PUNO,*C.J.,
QUISUMBING,**
YNARESSANTIAGO,
SANDOVALGUTIERREZ,
CARPIO,
AUSTRIAMARTINEZ,
CORONA,
versusCARPIOMORALES,
AZCUNA,
TINGA,
CHICONAZARIO,
GARCIA,
VELASCO,JR.,and
NACHURA,JJ.

COMMISSIONONAUDITandPromulgated:
CHIEFOFSTAFF,ARMED
FORCESOFTHEPHILIPPINES,
Respondents.June7,2007
xx

DECISION

CARPIO,J.:

TheCase

[1] [2]
Before the Court is a petition for certiorari assailing the 9 January 2003 Decision and 13
[3]
January2004Resolution oftheCommissiononAudit(COA).


TheAntecedentFacts

SalvadorParreo(petitioner)servedintheArmedForcesofthePhilippines(AFP)for32years.On5
January 1982, petitioner retired from the Philippine Constabulary with the rank of 2nd Lieutenant.
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January 1982, petitioner retired from the Philippine Constabulary with the rank of 2nd Lieutenant.
Petitioner availed, and received payment, of a lump sum pension equivalent to three years pay. In
1985,petitionerstartedreceivinghismonthlypensionamountingtoP13,680.

PetitionermigratedtoHawaiiandbecameanaturalizedAmericancitizen.InJanuary2001,theAFP
stopped petitioners monthly pension in accordance with Section 27 of Presidential Decree No.
[4] [5]
1638 (PD 1638), as amended by Presidential Decree No. 1650. Section 27 of PD 1638, as
amended,providesthataretireewholoseshisFilipinocitizenshipshallberemovedfromtheretired
listandhisretirementbenefitsterminateduponlossofFilipinocitizenship. Petitioner requested for
reconsiderationbuttheJudgeAdvocateGeneraloftheAFPdeniedtherequest.

PetitionerfiledaclaimbeforetheCOAforthecontinuanceofhismonthlypension.

TheRulingoftheCommissiononAudit

Inits9January2003Decision,theCOAdeniedpetitionersclaimforlackofjurisdiction.TheCOA
ruled:
Itbecomesimmediatelynoticeablethattheresolutionoftheissueathandhingesuponthevalidityof
Section 27 of P.D. No. 1638, as amended. Pursuant to the mandate of the Constitution, whenever a
dispute involves the validity of laws, the courts, as guardians of the Constitution, have the inherent
authoritytodeterminewhetherastatuteenactedbythelegislaturetranscendsthelimitimposedbythe
fundamentallaw.WherethestatuteviolatestheConstitution,itisnotonlytherightbutthedutyofthe
judiciarytodeclaresuchactasunconstitutionalandvoid.(Tatadvs.SecretaryofDepartmentofEnergy,
281 SCRA 330) That being so, prudence dictates that this Commission defer to the authority and
jurisdiction of the judiciary to rule in the first instance upon the constitutionality of the provision in
question.

Premisesconsidered,therequestisdeniedforlackofjurisdictiontoadjudicatethesame.Claimant is
[6]
advisedtofilehisclaimwiththepropercourtoforiginaljurisdiction.

Petitioner filed a motion for reconsideration. Petitioner alleged that the COA has the power and
authority to incidentally rule on the constitutionality of Section 27 of PD 1638, as amended.
Petitioner alleged that a direct recourse to the court would be dismissed for failure to exhaust
administrative remedies. Petitioner further alleged that since his monthly pension involves
government funds, the reason for the termination of the pension is subject to COAs authority and
jurisdiction.
Inits13January2004Resolution,theCOAdeniedthemotion.TheCOAruledthatthedoctrineof
exhaustionofadministrativeremediesdoesnotapplyiftheadministrativebodyhas,inthefirstplace,
no jurisdiction over the case. The COA further ruled that even if it assumed jurisdiction over the
claim,petitionersentitlementtotheretirementbenefitshewaspreviouslyreceivingmustnecessarily
ceaseuponthelossofhisFilipinocitizenshipinaccordancewithSection27ofPD1638,asamended.

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Hence,thepetitionbeforethisCourt.



TheIssues

Petitionerraisesthefollowingissues:

1.WhetherSection27ofPD1638,asamended,isconstitutional

2.WhethertheCOAhasjurisdictiontoruleontheconstitutionalityofSection27of
PD1638,asamendedand

[7]
3.WhetherPD1638,asamended,hasretroactiveorprospectiveeffect.


TheRulingofthisCourt

Thepetitionhasnomerit.

JurisdictionoftheCOA

PetitionerfiledhismoneyclaimbeforetheCOA.Amoneyclaimisademandforpaymentofasum
of money, reimbursement or compensation arising from law or contract due from or owing to a
[8] [9]
government agency. Under Commonwealth Act No. 327, as amended by Presidential Decree
[10] [11]
No.1445, moneyclaimsagainstthegovernmentshallbefiledbeforetheCOA.

Section2(1),ArticleIX(D)ofthe1987ConstitutionprescribesthepowersoftheCOA,asfollows:

Sec.2.(1)TheCommissiononAuditshallhavethepower,authority,anddutytoexamine,audit,and
settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and
property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions,
agencies, or instrumentalities, including governmentowned or controlled corporations with original
charters, and on a postaudit basis (a) constitutional bodies, commissions and offices that have been
granted fiscal autonomy under this Constitution (b) autonomous state colleges and universities (c)
other governmentowned or controlled corporations and their subsidiaries and (d) such non
governmental entities receiving subsidy or equity, directly or indirectly, from or through the
Government,whicharerequiredbylaworthegrantinginstitutiontosubmitsuchauditasaconditionof
subsidyorequity.However,wheretheinternalcontrolsystemoftheauditedagenciesisinadequate,the
Commissionmayadoptsuchmeasures,includingtemporaryorspecialpreaudit,asarenecessaryand
appropriatetocorrectthedeficiencies.It shall keep the general accounts of the Government and, for
suchperiodasmaybeprovidedbylaw,preservethevouchersandothersupportingpaperspertaining
thereto.

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ThejurisdictionoftheCOAovermoneyclaimsagainstthegovernmentdoesnotincludethepowerto
rule on the constitutionality or validity of laws. The 1987 Constitution vests the power of judicial
review or the power to declare unconstitutional a law, treaty, international or executive agreement,
presidentialdecree,order,instruction,ordinance,orregulationinthisCourtandinallRegionalTrial
[12]
Courts. Petitioners money claim essentially involved the constitutionality of Section 27 of PD
1638, as amended. Hence, the COA did not commit grave abuse of discretion in dismissing
petitionersmoneyclaim.

PetitionersubmitsthattheCOAhastheauthoritytoordertherestorationofhispensionevenwithout
rulingontheconstitutionalityofSection27ofPD1638,asamended.TheCOAactuallyruledonthe
matterinits13January2004Resolution,thus:

Furthermore, assuming arguendo that this Commission assumed jurisdiction over the instant case,
claimantsentitlementtotheretirementbenefitshewaspreviouslyreceivingmustnecessarilybesevered
or stopped upon the loss of his Filipino citizenship as prescribed in Section 27, P.D. No. 1638, as
[13]
amendedbyP.D.No.1650.

TheCOAeffectivelydeniedpetitionersclaimbecauseofthelossofhisFilipinocitizenship.


ApplicationofPD1638,asamended

PetitionerallegesthatPD1638,asamended,shouldapplyprospectively.TheOfficeoftheSolicitor
General(OSG)agreeswithpetitioner.TheOSGarguesthatPD1638,asamended,shouldapplyonly
tothosewhojoinedthemilitaryserviceafteritseffectivity,citingSections33and35,thus:

Section33.NothinginthisDecreeshallbeconstruedinanymannertoreducewhateverretirementand
separation pay or gratuity or other monetary benefits which any person is heretofore receiving or is
entitledtoreceiveundertheprovisionsofexistinglaw.

xxxx

Section.35.ExceptthosenecessarytogiveeffecttotheprovisionsofthisDecreeandtopreservethe
rightsgrantedtoretiredorseparatedmilitarypersonnel,alllaws,rulesandregulationsinconsistentwith
theprovisionsofthisDecreeareherebyrepealedormodifiedaccordingly.

The OSG further argues that retirement laws are liberally construed in favor of the retirees.
Article 4 of the Civil Code provides: Laws shall have no retroactive effect, unless the contrary is
provided.Section36ofPD1638,asamended,providesthatitshalltakeeffectuponitsapproval.It
was signed on 10 September 1979. PD 1638, as amended, does not provide for its retroactive
application.ThereisnoquestionthatPD1638,asamended,appliesprospectively.

However, we do not agree with the interpretation of petitioner and the OSG that PD 1638, as
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However, we do not agree with the interpretation of petitioner and the OSG that PD 1638, as
amended,shouldapplyonlytothosewhojoinedthemilitaryafteritseffectivity.SincePD1638,as
amended,isaboutthenewsystemofretirementandseparationfromserviceofmilitarypersonnel,it
should apply to those who were in the service at the time of its approval. In fact, Section 2 of PD
1638,asamended,providesthatth[e]Decreeshallapplytoallmilitarypersonnelintheserviceofthe
ArmedForcesofthePhilippines.PD1638,asamended,wassignedon10September1979.Petitioner
retiredin1982,longaftertheapprovalofPD1638,asamended.Hence,theprovisionsofPD1638,
asamended,applytopetitioner.

PetitionerHasNoVestedRighttohis
RetirementBenefits

Petitioner alleges that Section 27 of PD 1638, as amended, deprives him of his property which the
Constitutionandstatutesvestinhim.Petitionerallegesthathispension,beingapropertyvestedby
the Constitution, cannot be removed or taken from him just because he became a naturalized
Americancitizen.Petitionerfurtherallegesthattheterminationofhismonthlypensionisapenalty
equivalenttodeprivationofhislife.

Theallegationshavenomerit.PD1638,asamended,doesnotimpairanyvestedrightorinterestof
petitioner. Where the employee retires and meets the eligibility requirements, he acquires a vested
[14]
righttothebenefitsthatisprotectedbythedueprocessclause. AtthetimeoftheapprovalofPD
1638 and at the time of its amendment, petitioner was still in active service. Hence, petitioners
retirementbenefitswereonlyfuturebenefitsanddidnotconstituteavestedright.Before a right to
retirement benefits or pension vests in an employee, he must have met the stated conditions of
[15]
eligibilitywithrespecttothenatureofemployment,age,andlengthofservice. It is only upon
retirement that military personnel acquire a vested right to retirement benefits. Retirees enjoy a
protected property interest whenever they acquire a right to immediate payment under preexisting
[16]
law.

Further, the retirement benefits of military personnel are purely gratuitous in nature. They are not
similar to pension plans where employee participation is mandatory, hence, the employees have
[17]
contractualorvestedrightsinthepensionwhichformspartofthecompensation.
ConstitutionalityofSection27ofPD1638

Section27ofPD1638,asamended,provides:

Section27.MilitarypersonnelretiredunderSections4,5,10,11and12shallbecarriedintheretired
list of the Armed Forces of the Philippines.The name of a retiree who loses his Filipino citizenship
shallberemovedfromtheretiredlistandhisretirementbenefitsterminateduponsuchloss.
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The OSG agrees with petitioner that Section 27 of PD 1638, as amended, is unconstitutional. The
OSGarguesthattheobligationimposedonpetitionertoretainhisFilipinocitizenshipasacondition
forhimtoremainintheAFPretiredlistandreceivehisretirementbenefitiscontrarytopublicpolicy
andwelfare,oppressive,discriminatory,andviolativeofthedueprocessclauseoftheConstitution.
TheOSGarguesthattheretirementlawisinthenatureofacontractbetweenthegovernmentandits
employees.TheOSGfurtherarguesthatSection27ofPD1638,asamended,discriminatesagainst
AFPretireeswhohavechangedtheirnationality.

Wedonotagree.

The constitutional right to equal protection of the laws is not absolute but is subject to reasonable
[18]
classification. To be reasonable, the classification (a) must be based on substantial distinctions
whichmakerealdifferences(b)mustbegermanetothepurposeofthelaw(c)mustnotbelimitedto
[19]
existingconditionsonlyand(d)mustapplyequallytoeachmemberoftheclass.

Thereiscompliancewithalltheseconditions.Thereisasubstantialdifferencebetweenretireeswho
are citizens of the Philippines and retirees who lost their Filipino citizenship by naturalization in
anothercountry,suchaspetitionerinthecasebeforeus.Theconstitutionalrightofthestatetorequire
[20]
allcitizenstorenderpersonalandmilitaryservice necessarilyincludesnotonlyprivatecitizens
but also citizens who have retired from military service. A retiree who had lost his Filipino
citizenshipalreadyrenouncedhisallegiancetothestate.Thus,hemaynolongerbecompelledbythe
state to render compulsory military service when the need arises. Petitioners loss of Filipino
citizenshipconstitutesasubstantialdistinctionthatdistinguisheshimfromotherretireeswhoretain

theirFilipinocitizenship.Ifthegroupingsarecharacterizedbysubstantialdistinctionsthatmakereal
[21]
differences,oneclassmaybetreatedandregulateddifferentlyfromanother.

[22]
Republic Act No. 7077 (RA 7077) affirmed the constitutional right of the state to a Citizen
Armed Forces. Section 11 of RA 7077 provides that citizen soldiers or reservists include ex
servicemen and retired officers of the AFP. Hence, even when a retiree is no longer in the active
service,heisstillapartoftheCitizenArmedForces.Thus,wedonotfindtherequirementimposed
bySection27ofPD1638,asamended,oppressive,discriminatory,orcontrarytopublicpolicy.The
state has the right to impose a reasonable condition that is necessary for national defense. To rule
otherwisewouldbedetrimentaltotheinterestofthestate.

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Therewasnodenialofdueprocessinthiscase.WhenpetitionerlosthisFilipinocitizenship,theAFP
had no choice but to stop his monthly pension in accordance with Section 27 of PD 1638, as
amended.Petitionerhadtheopportunitytocontesttheterminationofhispensionwhenherequested
for reconsideration of the removal of his name from the list of retirees and the termination of his
pension. The Judge Advocate General denied the request pursuant to Section 27 of PD 1638, as
amended.

[23]
PetitionerarguesthathecanreacquirehisFilipinocitizenshipunderRepublicActNo.9225 (RA
9225),inwhichcasehewillstillbeconsideredanaturalbornFilipino.However, petitioner alleges
thatifhereacquireshisFilipinocitizenshipunderRA9225,hewillstillnotbeentitledtohispension
because of its prior termination. This situation is speculative. In the first place, petitioner has not
shown that he has any intention of reacquiring, or has done anything to reacquire, his Filipino
citizenship.Secondly,inresponsetotherequestforopinionofthenAFPChiefofStaff,GeneralEfren
L. Abu, the Department of Justice (DOJ) issued DOJ Opinion No. 12, series of 2005, dated 19
January2005,thus:

[T]heAFPuniformedpersonnelretirees,havingreacquiredPhilippinecitizenshippursuanttoR.A.No.
9225anditsIRR,areentitledtopensionandgratuitybenefitsreckonedfromthedatetheyhavetaken
theiroathofallegiancetotheRepublicofthePhilippines.Itgoeswithoutsayingthattheseretireeshave
norighttoreceivesuchpensionbenefitsduringthetimethattheyhaveceasedtobeFilipinospursuant
totheaforequotedP.D.No.1638,asamended,andanypaymentmadetothemshouldbereturnedtothe
[24]
AFP.xxx.

Hence, petitioner has other recourse if he desires to continue receiving his monthly pension. Just
[25]
recently, in AASJS MemberHector Gumangan Calilung v. Simeon Datumanong, this Court

upheldtheconstitutionalityofRA9225.IfpetitionerreacquireshisFilipinocitizenship,hewilleven
[26] [27]
recoverhisnaturalborncitizenship. InTabasav.CourtofAppeals, thisCourtreiteratedthat
[t]herepatriationoftheformerFilipinowillallowhimtorecoverhisnaturalborncitizenshipxxx.

PetitionerwillbeentitledtoreceivehismonthlypensionshouldhereacquirehisFilipinocitizenship
sincehewillagainbeentitledtothebenefitsandprivilegesofFilipinocitizenshipreckonedfromthe
time of his reacquisition of Filipino citizenship. There is no legal obstacle to the resumption of his
retirement benefits from the time he complies again with the condition of the law, that is, he can
receivehisretirementbenefitsprovidedheisaFilipinocitizen.

We acknowledge the service rendered to the country by petitioner and those similarly situated.
However, petitioner failed to overcome the presumption of constitutionality of Section 27 of PD
1638,asamended.Unlesstheprovisionisamendedorrepealedinthefuture,theAFPhastoapply
Section27ofPD1638,asamended.
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Section27ofPD1638,asamended.

WHEREFORE, we DISMISS the petition. We AFFIRM the 9 January 2003 Decision and 13
January2004ResolutionoftheCommissiononAudit.

SOORDERED.


ANTONIOT.CARPIO
AssociateJustice


WECONCUR:


(Onofficialleave)
REYNATOS.PUNO
ChiefJustice




LEONARDOA.QUISUMBING CONSUELOYNARESSANTIAGO
ActingChiefJustice AssociateJustice



ANGELINASANDOVAL MA.ALICIAAUSTRIA
GUTIERREZ MARTINEZ
AssociateJustice AssociateJustice









RENATOC.CORONA CONCHITACARPIOMORALES
AssociateJustice AssociateJustice



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ADOLFOS.AZCUNA DANTEO.TINGA
AssociateJustice AssociateJustice




MINITAV.CHICONAZARIO CANCIOC.GARCIA
AssociateJustice AssociateJustice




PRESBITEROJ.VELASCO,JR. ANTONIOEDUARDOB.
AssociateJustice NACHURA
AssociateJustice


CERTIFICATION

Pursuant to Section 13,Article VIII of the Constitution, I certify that the conclusions in the above
Decisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionof
theCourt.


LEONARDOA.QUISUMBING
ActingChiefJustice

*Onofficialleave.
**ActingChiefJustice.
[1]
UnderRule64inrelationtoRule65ofthe1997RulesofCivilProcedure.
[2]
Rollo,pp.1112.SignedbyChairmanGuillermoN.CaragueandCommissionersRaulC.FloresandEmmanuelM.Dalman.
[3]
Id.at1617.
[4]
EstablishingANewSystemofRetirementandSeparationforMilitaryPersonneloftheArmedForcesofthePhilippinesandForOther
Purposes,dated10September1979.
[5]
Amending Sections 3 and 5 of Presidential Decree No. 1638 Entitled Establishing A New System of Retirement and Separation for
MilitaryPersonneloftheArmedForcesofthePhilippinesandForOtherPurposes,dated8November1979.
[6]
Rollo,p.12.
[7]
Id.at56.
[8]
Section4(o),RuleI,1997RevisedRulesofProcedureoftheCommissiononAudit.
[9]
AnActFixingtheTimeWithinWhichtheAuditorGeneralShallRenderhisDecisionsandPrescribingtheMannerofAppealTherefrom.
Approvedon18June1938.
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Approvedon18June1938.
[10]
OrdainingandInstitutingaGovernmentAuditingCodeofthePhilippines.Signedon11June1978.
[11]
See Department of Agriculture v. NLRC, G.R. No. 104269, 11 November 1993, 227 SCRA 693 Carabao, Inc. v. Agricultural
ProductivityCommission,etal.,146Phil.236(1970).
[12]
SpousesMirasolv.CourtofAppeals,403Phil.760(2001).
[13]
Rollo,p.17.
[14]
SeeGovernmentServiceInsuranceSystemv.Montesclaros,G.R.No.146494,14July2004,434SCRA441.
[15]
SeeBrionv.SouthPhil.UnionMissionof7th DayAdventistChurch,366Phil.967(1999).
[16]
GovernmentServiceInsuranceSystemv.Montesclaros,supranote14.
[17]
Id.
[18]
Tiuv.CourtofAppeals,361Phil.229(1999).
[19]
Beltranv.SecretaryofHealth,G.R.No.133640,25November2005,476SCRA168.
[20]
Section4ofthe1987Constitutionprovides:
Sec.4.TheprimedutyoftheGovernmentistoserveandprotectthepeople.TheGovernmentmaycalluponthepeopletodefendthe
Stateand,inthefulfillmentthereof,allcitizensmayberequired,underconditionsprovidedbylaw,torenderpersonal,military,or
civilservice.


[21]
Tiuv.CourtofAppeals,supranote18.
[22]
AnActProvidingfortheDevelopment,Administration,Organization,Training,MaintenanceandUtilization of the Citizen Armed
ForcesofthePhilippinesandForOtherPurposes.Approvedon27June1991.
[23]
CitizenshipRetentionandReAcquisitionActof2003.

[24]
Rollo,pp.6364.
[25]
G.R.No.160869,11May2007.
[26]
BengsonIIIv.HouseofRepresentativesElectoralTribunal,G.R.No.142840,7May2001,357SCRA545.
[27]
G.R.No.125793,29August2006,500SCRA9.

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