Plaintiff  brought  this action to  compel  the  National Rice and Corn Corporation commonly known as "NARIC" to reinstate him  to his position as warehouseman  in warehouse No. 9-B;  to pay him his back salaries at P190  per month  from  30  June  1950,  the  date of  his  suspension, until reinstated,  together  with lawful interest from.the date  of the filing of the  complaint (10 June 1954) ; to pay him the  sum of P5,000 by way of  actual  and moral damages and P2,000 by way of exemplary damages; to pay him his  accumulated sick and vacation leave of  five months amounting to P950 at the rate of P190 a month  and to pay him  his severance pay under NARIC Resolution  No. 416, which  provides one month salary for every year of service, amounting to PI,900 corresponding to ten months, should he no  longer be entitled to reinstatement.  He further prays for  such other and further relief as law and justice may warrant.   In support of his prayer he alleges that on 30 June 1950 he was suspended as warehouseman of warehouse No. 9-B by,the Assistant General Manager of the NARIC when it  was reported by the Inventory Committee that there was a shortage of 4,775 sacks valued at P24,750 in the total number of sacks entrusted to his custody and responsibility as  such warehouseman; that he was suspended upon recommendation of a committee which investigated the case but without affording him a chance to be informed of the nature and cause of the accusation against him and to be heard and to defend  himself; that the case was brought to the City Fiscal's  Office and after investigation he was charged with malversation in  an information filed before  the  Court of First Instance  of Manila of which he was tried and acquitted  on 20  September 1.952; that despite his acquittal and demand to be reinstated  and paid  his  salary  during  suspension,  the' defendant refused to do so; that he appealed to the Secretary of Economic. Coordination but the latter ignored and refused to take action on his claim for payment of back salaries; that since April 1936 he served the NARIC  as clerk continuously until 2 January 1942 when the Japanese Army  invaded  the  Philippines; that he was reemployed and resumed the same position from 2 May  1946 until 30 June 1950 when he was suspended; that he has never enjoyed his 15 days  vacation  and 15 days sick leave  for every year  of  service to which  he was  entitled during the time he was employed by the defendant,  but not more than five  months vacation and sick  leave  which is  the maximum period provided by law; that on  27 October 1952 the board of directors of the NARIC adopted Resolution No. 416 granting severance pay  to the personnel of  the NARIC equivalent to one month salary for every year of service but  not  exceeding twelve months! subject to the approval of the Secretary of Economic Coordination..

The NARIC admits the pleaded facts in  paragraphs 1, 2' and 5 of the first cause of action but alleges that plaintiff's position as warehouseman was of a highly  confidential nature and his suspension was adopted as a precautionary measure; denies  those alleged in paragraphs  3 and 4 of the first cause of action, avers that the plaintiff was notified of  the  hearing of the  committee but  failed to  appear, and denies finally those stated in paragraphs 10  and 11 of the first cause of action referring to  actual, moral and exemplary damages as under the law they are not recoverable states that the salary of the plaintiff is not as alleged in paragraph 12 of the first cause of  action but P2,280 per annum only; admits those alleged in paragraph  2, 8. and 4 of the second cause of action but states that the entity or entities that employed  the plaintiff before his suspension were distinct from the NARIC,; denies specifically those pleaded in paragraph 5 of the second cause of action concerning vacation and sick leave; admits the  allegations in paragraph  2 of the third  cause of action but alleges  that plaintiff is  not qualified or entitled to enjoy the benefits of Resolution No. 416 adopted by the board of directors of the NARIC mentioned in paragraph 2 of the third cause of action of the complaint.   By  way of special  defenses,  the NARIC alleges that aside from the criminal prosecution against the  plaintiff  there was an. administrative investigation conducted against him  and the investigating  committee found him guilty of participation in the  over issue  of  sacks under his charge and  that his suspension was predicated on the findings of the investigating committee and not on the criminal case brought against him; that section 260 of the Revised Administrative Code is not applicable to the defendant because it is not a bureau qr office and its officers  and employees do not come under the civil service rules; that under its charter  the  NARIC by  its  board  of  directors is  empowered to prescribe its own rules and regulations for the removal and compensation of its employees different from those that govern employees under the civil service rules; that  Resolution No; 416 referred to in paragraph 2 of the third; cause  of action of the complaint cannot be availed of by  the plaintiff;  that under the law at the time the plaintiff was separated from the service unused vacation and sick leave were forfeited in favor of the Government; and that Republic Act No, 611 which  authorizes the commutation  of  vacation  and sick leave approved on 5  May 1952 (1951) cannot be  availed of by the plaintiff because the act hag no retroactive effect.

A motion to dismiss was filed by the defendant Alfredo Montelibano  as Secretary of  Economic  Coordination and acted upon favorably by the Court dismissing the complaint as to him in  his official capacity.

On  the date set for hearing, the parties  entered into the following stipulation of facts:

1. Come now the patties in the above entitled case  assisted by the undersigned counsel and to this  Honorable Court hereby  stipulate (on) the following facts:
   
   
2. That herein complainant has been  employed with the NARIC in 1936, date  of organization,' continuously  up  to  the Japanese occupation  on  January 2, 1942 and was  employed again on  (its) organization on May 1946 up to June 1950;
   
   
3. That during these periods of. employment of the plaintiff  he has to his credit sick and vacation leave of 77.416 days;
   
   
4. (That) on June 1950,  plaintiff was  suspended as warehouseman at warehouse Ho. 9-B,  The suspension order  was signed  by Mr. V. R. Concepcion, Assfc. Gen. Manager of the  NARIC;
   
   
5.  That  Administrative  Investigation  has  been  conducted and the said report was submitted to the Board ,of Directors.  The draft is hereby attached, NAPIC Exhibit 1. That'Administrative Investigation has  been conducted against Mr. Vicente Gualbcrto, Auditor's Representative; Mr, Ramon Ramirez, Checker;. Mr. Wilson Albania and herein Mr. U. P. Tabora,' plaintiff.  The above three persons appeared. during  the administrative investigation  while  the  herein plaintiff was not able to appear and defend himself, because  he did not receive  any notice  to appear  in the Administrative Investigation ;
   
   
6. That plaintiff was prosecuted and tried in the  Court  of First Instance, Manila (No.  13064) of qualified  theft.  The  case  has been dismissed.  He was charged also of  (with) malversation (in) criminal case No. 14069 and was  acquitted;
   
   
7. That plaintiff after his acquittal filed "with the NARIC thru his counsel for  the payment of his salary  corresponding to the period of his suspension until reinstatement, but despite several and repeated  demands made by the plaintiff, defendant NARIC refused and  continuously refuses  to  reinstate  and to pay  the plaintiff his salary  corresponding  (to)  the period  of  his  suspension until reinstatement.
   
   
8. That thru  the  request of  the NARIC for  an opinion' on plaintiff's claim, the Solicitor General's Office, who at the same time is the Government Corporate Counsel, rendered an  opinion, No. 123, requiring the NARIC to pay plaintiff's  salary corresponding to the period of his suspension; copy of said opinion is hereby attached as Annex "C" consisting of four (4) pages.
   
                                                                                                        Estanislao A. Fernandez and
                                                                                                                  Celso A. Fernandez
   
                                                                                            By:  (Sgd.)  Celso A. Fernandez
                                                                                                           Counsel for the Plaintiff
                                                                                                        308 Samanillo Bldg.,  Manila
   
   By:  (Sgd.)  Jose Pagaduan
   Special Counsel for the NARIC
   

Upon the foregoing stipulation  of facts  the Court dismissed the complaint without costs, on the ground that the plaintiff as  NARIC employee cannot invoke the  civil service rules and regulations  because Republic Act  No. 663 does not so provide.   In support  of its opinion" the trial court invokes  section 6(b)  of Republic Act No. 663  approved   on 16  June  1951 which  provides

The Board of Directors  shall establish  and  prescribe its  own rules, regulations, standards  and records for the  employment, promotion,  demotion, removal, transfers,  welfare,  compensation  and appraisal of performance of employees and  officers of  the  Corporation, and provide a system of organization to fix responsibility and promote efficiency.

To  strengthen its opinion it cites Section  4 of Republic Act No, 821  Creating the Agricultural Credit and  Cooperative Financing  Administration  which provides

The Administration is  hereby authorized * * * to  appoint  and fix the salaries of a secretary and such experts, and subject to the provisions of the  civil service laws, such other officers and employees, as are necessary to execute such function; * * *.

It notes that whereas in the quoted provision of Republic Act No. 663 no mention is made of the civil service law embodied in the Revised Administrative Code, in the quoted provision of Republic Act No. 821 mention is made of such law.   From  that  contrast  it  draws the  conclusion that the Congress  did not intend to place the officers  and employees of the NARIC under the civil service rules and regulations but under the  rules  and" regulations  to be promulgated by the board  of directors,. especially on  reinstatement,  payment of back salaries, vacation and  sick leave  privileges and such  other gratuities as might be granted by the board of directors in accordance with law.

The NARIC was established by the Government to protect . the people against excessive or unreasonable rise in the price of cereals by unscrupulous dealers.   With that main objective there is no reason why  its function should not be deemed governmental.  The Government owes its very existence to that aim and purpose to  protect the people. If that is the case, there is no valid  reason for holding that the  officers and employees of a government institution, organization  or agency entrusted with part of the governmental functions do  not  fall under the  protection afforded  by  the civil service rules and regulations.^[1]  To bring  about honesty and efficiency of officers and employees of such institutions,  organizations or agencies  a climatic condition should be created to make them feel secure in the enjoyment of their office or employment in the same way as all other  officers  and employees of the government are safeguarded  in the tenure  of their office  or  employment. That safeguard, guarantee,  or feeling of security that they would hold their office or employment during good behavior and would not be dismissed without justifiable  cause to be determined in  an investigation, where an opportunity to be heard and defend themselves in person or by counsel is afforded them, would bring about such a desirable' condition.  To do away with it would lead to inefficiency and most likely to dishonesty on the part of the officers and employees and abuse on the part of the board of directors.

Republic Act  No. 663 invoked by the trial court was approved on 16 June 1951.  It cannot be made retroactive and to  apply to  the plaintiff who  was  suspended on 30 June 1950.  But even if the provisions of Republic Act No.  663, invoked by the trial court, were  to be applied, still the plaintiff as warehouseman of the defendant cannot be  suspended  or removed from  employment without an investigation and  a finding that a. sufficient cause exists' to suspend or remove him.  Section  6(b) of Republic Act No. 663 does not and cannot authorize the board of directors of the defendant to remove any officer or employee of the corporation without cause,  for the authority of the board of directors to prescribe its own rules and regulations, etc. for the removal of officers and employees of the defendant was not and could' not have  been intended to clothe the corporation with despotic and tyrannic power  of removal of its officers or employees at its whim and caprice.  A power granted to the board of directors such as that claimed by the corporation would not be conducive to good government but would tend to create abject  and slavish officers and employees.

While the suspension of the plaintiff upon information received by the  Assistant General  Manager of the defendant that there was an overissue  of sacks in the plaintiff's custody as warehouseman was justified, his separation from the service, which was  actually done because he has never been reinstated  and his request for  reinstatement and  demand for payment of back salaries  during his suspension  was denied,^[1]  is unlawful, because lie was acquitted  by the court of malversation with which he  was charged^[2] and such acquittal would entitle him to reinstatement and payment of back unpaid salaries.^[3]  If, as alleged and claimed by the defendant, his separation was the result of the recommendation of a committee that conducted an inquiry into the charges against him for over issue of sacks, and  not of criminal charges brought against him, such inquiry and recommendation is of no legal effect, because although the defendant claims that the plaintiff was notified of such investigation and to be present and defend himself, nevertheless the stipulation of facts states that "the herein plaintiff was not able to appear and defend himself, because he did not  receive  any notice to appear in the Administrative  Investigation."   (Paragraph 4 of  the  stipulation of facts.)   And  although  in the  unsigned report on  the investigation attached to the stipulation of facts (Exhibit 1-NARIC), the plaintiff's dismissal from the  service was recommended,  still  such report cannot be made the basis of the plaintiff's dismissal from the service, because according to the stipulation of facts he did not receive any notice to appear in the investigation and for that reason did not appear  thereat to defend himself.

For lack of evidence the prayer for moral and exemplary damages cannot be granted.

The prayer of the  petition is in the alternative.  So, if the plaintiff is reinstated to his former employment  as warehouseman and paid  his back unpaid salaries during the period from the date of his suspension to that of his reinstatement,  the prayer for sick  and vacation leave of five months and severance  pay pursuant to NARIC Resolution No. 416 need not  be  granted. There is  no showing that the plaintiff cannot be reinstated.

Conformably thereto, the  judgment  appealed from is reversed; and the NARIC  is  directed  to reinstate  the plaintiff to his employment as warehouseman and to pay him his back unpaid salaries  during his suspension from 30 June 1950 to the date of his reinstatement.  No costs shall be taxed.

Parás, C. J., Bengzon, Reyes, A., Jugo, Bautista Angelo, Labrador,  Reyes, J. B. L. and Endencia, JJ.,  concur.

Concepcion, J., concurs in the result.

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^[1] National Rice and Corn Corporation vs. NARIC Workers' Union, supra, p. 663.
^[1] Exhibit  B.
^[2] Resolution No. 3.62 (Exhibit E  or  3-NARIC)  and  Resolution No. 384  (Exhibit G).
^[3] Battmgbakal vs. National Development Co., 49 Off. Gaz.,  2290; National Rice and Corn Corporation vs. NASIC Workers' Union, supra, p. 563.