Narvasa v. Flores
REITERATIONFacts
The Antecedents: Chief Justice Andres R. Narvasa (Ret.) requested the re-computation of his retirement benefits. He had previously received his monthly pension and accumulated monthly pensions, Special Allowance for the Judiciary (SAJ), and monthly annuities. The current request sought to include step increments accrued under the Salary Standardization Law, Republic Act No. 6758, in his Basic Monthly Salary (BMS) for computation purposes, alleging a total deficiency of ₱224,198.74. Procedural History: The Court referred the retired CJ's request to the Deputy Clerk of Court and FMBO Chief, Atty. Corazon Ferrer-Flores, for comment. The FMBO Chief submitted a comment clarifying computations regarding leave credits and addressing the issue of step increments. The Petition: The retired CJ, assisted by Justice Bernardo P. Pardo (Ret.), formally requested the re-computation of his retirement benefits to include step increments, asserting a deficiency in his received benefits.
Issue(s)
Whether the step increments earned by the retired Chief Justice should be included in the computation of his Basic Monthly Salary for retirement benefits. Whether the Personnel Emergency Relief Allowance (PERA) and Additional Compensation (ADCOM) should be included in the computation of the monetary value of the retired Chief Justice's leave credits. Whether the monthly pension and SAJ component should be adjusted to reflect the 10% salary increase authorized under Executive Order (E.O.) No. 611.
Ruling
The Court GRANTED the request of Chief Justice Andres R. Narvasa (Ret.) for the re-computation of his retirement benefits. The Fiscal Management and Budget Office (FMBO) was directed to effect the payment of the deficiency in the monetary value of his terminal leave pay, the deficiency in his accumulated monthly pensions due to the inclusion of earned step increments and other adjustments, and to adjust his monthly pension, including the SAJ component, to reflect the 10% salary increase under E.O. No. 611 with a corresponding deduction from the SAJ.
Ratio Decidendi
On the inclusion of step increments in the Basic Monthly Salary for retirement benefits: The Court affirmed that step increments earned should form part of the Basic Monthly Salary (BMS) for the purpose of computing retirement gratuity and monthly pension. This is supported by Section 2 of Republic Act No. 9227, which defines "basic monthly salary" as that in accordance with the specified salary grades under Republic Act No. 6758, and Section 7 of R.A. No. 6758, which includes step increments as a component of the Salary Schedule representing full compensation. The Court clarified that while step increments accrued from January 1, 1990, to December 31, 1998, could not be the subject of back pay, they should still be recognized as earned and included in the BMS at the time of compulsory retirement. The Court's Resolution of February 24, 2004, in A.M. No. 03-12-04-SC further clarified that the BMS includes step increments and longevity pay. On the inclusion of PERA and ADCOM in the computation of terminal leave pay: The Court ruled that the Personnel Emergency Relief Allowance (PERA) and Additional Compensation (ADCOM) should be included in the computation of the monetary value of the retired Chief Justice's leave credits. This is in accordance with the Court's Resolution of February 29, 2000, in A.M. No. 99-8-05-SC, which held that PERA and ADCOM are part of compensation and should be included in retirement benefits and terminal leave pay. The Court cited the principle of liberal interpretation of retirement laws, as applied in Borromeo v. Civil Service Commission, which held that the highest monthly aggregate of transportation, living, and representation allowance (COLA and RATA) should be the basis for computing retirement gratuity and terminal leave pay for members of the Judiciary and Constitutional Commissions. Therefore, the amount deducted from the retired CJ's pension for leave credits was a deficiency, not an overpayment. On the adjustment of monthly pension and SAJ component for salary increase: The Court found merit in the position that the monthly pension and SAJ component should be adjusted to reflect the 10% basic salary increase authorized under E.O. No. 611. This adjustment entails a corresponding deduction from the SAJ component, as per the Court's Resolution of March 31, 2008, in A.M. No. 07-8-3-SC. Section 6 of R.A. No. 9227 mandates that subsequent salary increases are implemented by converting the special allowance equivalent to the increase in basic salary into part of the basic salary, with any excess in the special allowance continuing to be granted. Thus, the 10% increase in basic salary is sourced from the SAJ funds, resulting in a 10% reduction in SAJ.
Main Doctrine
Retirement benefits, including monthly pension and terminal leave pay, shall be computed based on the actual basic monthly salary, which includes step increments earned, and shall also consider allowances such as PERA and ADCOM in the computation of terminal leave pay, in line with the liberal interpretation of retirement laws.