The Supreme Court addressed a dispute over hazard pay received by San Lazaro Hospital employees, focusing on the validity of a fixed hazard pay rate versus a rate based on a percentage of salary. The Court ultimately ruled that while the fixed rate was invalid, the employees were not required to refund the disallowed amounts due to their good faith and the nature of their hazardous work. This decision clarifies the complexities of hazard pay calculations and offers protections to public health workers who received benefits under previously accepted guidelines.

San Lazaro Hospital’s Hazard Pay: When Fixed Rates Clash with Workers’ Rights

This case revolves around the hazard allowances given to employees of San Lazaro Hospital (SLH), specifically addressing whether these allowances were paid in accordance with the law. From January to June 2009, SLH employees with Salary Grades (SG) 20 to 26 received hazard allowances of P4,989.75 per month. The Commission on Audit (COA) disallowed these payments, arguing that they did not comply with Republic Act (RA) No. 7305, also known as “The Magna Carta of Public Health Workers.” Section 21 of RA 7305 mandates that hazard allowances should be proportional to an employee’s monthly salary, specifically at least five percent (5%) of the monthly basic salary for health workers within SG 20 and above.

The hospital employees contested the disallowance, asserting they received the hazard pay based on Department of Health (DOH) Administrative Order (AO) No. 2006-0011, which set a fixed payment of P4,989.75 for public health workers with SG 20 and above. They believed they were entitled to these benefits due to their positions and work environment being classified as high risk. The COA, however, rejected this argument, citing a previous Supreme Court ruling, A.M. No. 03-9-02-SC, which deemed DOH AO No. 2006-0011 “void on its face.” The COA emphasized that the prior ruling was already in effect when the payments were made, negating the claim of good faith. The Supreme Court was thus tasked to evaluate if the COA was correct in disallowing the payment.

The legal framework governing hazard pay is primarily outlined in Section 21 of RA No. 7305, which states:

SEC. 21. Hazard Allowance. – Public health workers in hospitals, sanitaria, rural health units, main health centers, health infirmaries, barangay health stations, clinics and other health-related establishments located in difficult areas, strife-torn or embattled areas, distressed or isolated stations, prisons camps, mental hospitals, radiation-exposed clinics, laboratories or disease-infested areas or in areas declared under state of calamity or emergency for the duration thereof which expose them to great danger, contagion, radiation, volcanic activity/eruption, occupational risks or perils to life as determined by the Secretary of Health or the Head of the unit with the approval of the Secretary of Health, shall be compensated hazard allowances equivalent to at least twenty-five percent (25%) of the monthly basic salary of health workers receiving salary grade 19 and below, and five percent (5%) for health workers with salary grade 20 and above.

The Court needed to determine whether DOH AO No. 2006-0011, which stipulated a fixed rate for hazard pay, was consistent with this provision. The Supreme Court, in A.M. No. 03-9-02-SC, had already addressed this issue, observing:

In a language too plain to be mistaken, [RA] No. 7305 and its [IRR] mandate that the allocation and distribution of hazard allowances to public health workers within each of the two salary grade brackets at the respective rates of 25% and 5% be based on the salary grade to which the covered employees belong. x x x The computation of the hazard allowance due should, in turn, be based on the corresponding basic salary attached to the position of the employee concerned.

Based on this, the Court previously declined to conform with the fixed amount under DOH AO No. 2006-0011, stating that the DOH exceeded its authority by fixing an exact amount of hazard pay for public health workers with SG 20 and above. The Supreme Court categorically ruled that DOH AO No. 2006-0011 was void on its face for being “ultra vires x x x [and] unreasonable” insofar as it conflicted with RA No. 7305. Here, the Court emphasized the importance of administrative bodies acting within the bounds of the law they are tasked to implement. It clarified that administrative rules cannot override or modify the provisions of the law itself.

Petitioners argued that A.M. No. 03-9-02-SC was an exercise of administrative supervision, not judicial review. The Court clarified that although A.M. No. 03-9-02-SC arose from an administrative matter, its ruling on the invalidity of the fixed rate under DOH AO No. 2006-0011 was not an obiter dictum. It was essential to the determination of the issue at hand: whether to grant hazard allowances according to DOH AO No. 2006-0011. The Court thus reiterated its finding that the DOH issuance was inconsistent with the law and therefore void. An administrative rule or regulation may be considered valid only if it conforms, and does not contradict, the provisions of the enabling law. If a discrepancy occurs between the basic law and an implementing rule or regulation, it is the former that prevails, because the law cannot be limited nor broadened by mere administrative issuance.

The court further clarified the liability of the recipients by stating that the liability may be excused (1) upon a showing that the questioned benefits or incentives were genuinely given in consideration of services rendered; or (2) when excused by the Court on the basis of undue prejudice, social justice considerations, and other bona fide exceptions depending on the purpose, nature, and amount of the disallowed benefit or incentive relative to the attending circumstances. This decision provides significant protection to public health workers who received hazard pay under previously accepted guidelines, ensuring they are not penalized for relying on official issuances. The Court emphasized that the employees had performed hazardous duties and were entitled to hazard pay; therefore, the employees should not be made to refund the disallowed amounts.

FAQs

What was the central issue in this case?	The key issue was whether hazard pay given to San Lazaro Hospital employees, based on a fixed rate defined by DOH AO No. 2006-0011, complied with the legal requirement that hazard pay be proportional to salary, as stated in RA 7305.
Why did the COA disallow the hazard pay?	The COA disallowed the hazard pay because it followed a fixed rate that was not proportional to the employees’ salaries, which contradicted Section 21 of RA 7305, which mandates that hazard allowances should be a percentage of the monthly basic salary.
What did DOH AO No. 2006-0011 stipulate about hazard pay?	DOH AO No. 2006-0011 set a fixed amount of P4,989.75 as hazard pay for public health workers with Salary Grades 20 and above, regardless of their specific monthly salary.
What was the Supreme Court’s stance on DOH AO No. 2006-0011?	The Supreme Court deemed DOH AO No. 2006-0011 void because it conflicted with RA 7305 by establishing a fixed rate instead of a salary-based percentage for hazard pay, thereby exceeding the DOH’s authority.
Did the Supreme Court order the employees to return the disallowed amounts?	No, the Supreme Court did not order the employees to return the disallowed amounts. It recognized that the employees had acted in good faith and were entitled to hazard pay due to the nature of their work.
What is the effect of the ruling in A.M. No. 03-9-02-SC?	The ruling in A.M. No. 03-9-02-SC established a precedent that administrative orders like DOH AO No. 2006-0011 must align with the law and cannot impose fixed rates contrary to statutory requirements for salary-based benefits.
How did the Court balance legal compliance and fairness in this case?	The Court upheld the disallowance to ensure compliance with RA 7305 but excused the employees from refunding the amounts, considering their good faith, the hazardous nature of their work, and the lack of clear, definitive guidelines from the DOH.
What are the implications for other public health workers receiving hazard pay?	The ruling clarifies that hazard pay must be calculated as a percentage of salary, as mandated by RA 7305. It also provides a basis for equitable relief for employees who received hazard pay under previous guidelines if they acted in good faith.

This case underscores the judiciary’s role in interpreting laws and ensuring that administrative regulations align with legislative intent. It also highlights the importance of protecting the rights and welfare of public health workers, particularly when they rely on official guidelines in good faith. The Supreme Court’s decision balances adherence to legal mandates with equitable considerations, offering guidance for future hazard pay calculations and protections for affected employees.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ABRENICA, ET AL. VS. COMMISSION ON AUDIT, G.R. No. 218185, September 14, 2021