Dimagiba v Espartero

FACTS: Hilarion Dimagiba et al were members of The Livelihood Corporation (LIVECOR), a GOCC.
LIVECOR and the formerly Human Settlement Development Corp. (HSDC) now Strategic Investment and
Development Corp. (SIDCORP), another GOCC, entered into a Trust Agreement, where LIVECORP
would manage the disposition and liquidation of HSDC assets; Agreement provided for certain LIVECOR
personnel designated to operate certain basic HSDC functions, as well as monthly honoraria and commutable
reimbursable representation allowance (CRRA).
DBM later, due a modified stafing pattern, abolished Dimagiba et al's positions in LIVECOR and gave them
separation pay. HSDC resolved to terminate them as well due to their separation from LIVECOR, but
HSDC OIC wrote to the OGCC to seek an opinion.
OGCC opinion was that it was the power of the HSDC to terminate and grant gratuity pay, as long as valid
under COA rules. HSDC, thus, terminated Dimagiba et al and awarded them gratuity pay.
LIVECOR Admin, however, later required the HSDC gratuity pay to be approved by him upon clearance
from COA and OGCC, to avoid legal problems. LIVECOR lawyer was told to seek OGCC opinion as well.
LIVECOR Chief Legal Counsel later wrote to Dimagiba, saying that they were not entitled to gratuity pay
because their designation to HSDC was not intended to be separate from their LIVECOR employment.
OGCC later issued opinion stating that gratuity pay could not be granted because such was double
compensation under Sec. 8, Art. IX-B of Consti.
Case was brought before Ombudsman, which ordered dismissal of several LIVECOR officers for gross
neglect of duty in not granting the gratuity, reasoning out that the prohibition on double compensation does
not apply to gratuities, which are given out in recognition of past services, and that the grant of such was not
subject to LIVECOR discretion.
CA: reversed Ombudsman; gratuity packages constituted double compensation.

ISSUE: WON the gratuities constitute double compensation.

HELD: YES.
the only exception for an employee to receive additional, double and indirect compensation is where the law
allows him to receive extra compensation for services rendered in another position which is an extension or is
connected with his basic work.
The gratuity pay was given by reason of satisfactory work under the Trust Agreement. Thus, it takes on the
nature of a bonus, which by its very nature is an additional remuneration or compensation.
When Dimagiba et al were dismissed from LIVECOR, they were awarded separation pay, which already
included gratuity pay for the years they worked at concurrently in HSDC, thus granting them another gratuity
pay for their work under the Trust Agreement would amount to indirectly giving them additonal
compensation for services rendered in another position which is an extension or is connected with his basic
work, which is prohibited; this can only be allowed through a law expressly authorizing them to receive the
additional payment (note: the HSDC resolution is not a law, and nowhere in the HSDC law does it provide
for gratuity pay).
Note: The prohibition against additional or double compensation, except when specifically authorized by law,
is considered a "constitutional curb” on the spending power of the government.